How To Boost Your Credit Score FAST: 5 Proven Strategies Revealed with Shonda Martin

Summary

Earn Your Leisure Podcast Summary
Episode: How To Boost Your Credit Score FAST: 5 Proven Strategies Revealed with Shonda Martin
Release Date: February 8, 2025
Hosts: Rashad Bilal and Troy Millings
Guest Expert: Shonda Martin

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Introduction

In this episode of Earn Your Leisure, hosts Rashad Bilal and Troy Millings delve into the critical topic of credit scores and how listeners can enhance theirs rapidly. Joined by credit expert Shonda Martin, the discussion focuses on actionable strategies to boost credit ratings, essential for financial health and achieving major life goals like purchasing a home or a car.

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Guest Introduction

[04:16] Troy Millings:
"Shonda Martin, somebody that's been at Invest Fest, done episodes, events with us in Oakland with Chase, an expert in the field, and a really good communicator helping people with real, no-gimmick information."

Shonda Martin brings extensive experience in financial education, particularly in credit management, making her the perfect guest to guide listeners through improving their credit scores efficiently.

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Strategy 1: Target Late Payments

[11:28] Shonda Martin:
"The first non-conventional tip is to target late payments. Payment history accounts for 35% of your credit score, making up 192.5 points. To mitigate the negative impact of late payments, she introduces the 11 to 1 rule."

Key Points:

• 11 to 1 Rule: For every late payment in the past three years, secure 11 on-time payments to neutralize the negative effect.
• Goodwill Adjustments:
  [15:36] Shonda Martin:
  "Request a goodwill adjustment from your lender. Capital One and Credit One are known to honor these requests. This involves writing a letter acknowledging the mistake and asking for the removal of the late payment from your credit report."

Notable Quote:
[16:40] Shonda Martin:
"This goodwill requests are granted more often than you might think and can significantly boost your credit score."

Action Steps:

1. Identify late payments in the last three years.
2. Implement the 11 to 1 rule by making consistent on-time payments.
3. Send personalized goodwill adjustment letters to creditors to remove past late payments.

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Strategy 2: Lower Credit Utilization

[20:08] Shonda Martin:
"Lower your credit utilization before your statement date. This means reducing your balance to below 10% of your credit limit a few days before the statement is generated."

Key Points:

• Statement Date vs. Due Date:
  [22:14] Shonda Martin:
  "Your statement balance, reported on your statement date, significantly affects your credit utilization and, consequently, your credit score."

• Optimal Utilization Range:
  [16:40] Shonda Martin:
  "Maintain a credit utilization between 1% and 9%. Anything above 9% can hinder your credit score improvements."

• Misconception Correction:
  [28:03] Troy Millings:
  "Paying off your credit card in full by the due date doesn’t benefit your credit score as much as keeping a small balance."

Notable Quote:
[23:31] Shonda Martin:
"If you are seeking to improve your credit score, make sure that you are reporting between 1 and 9% by your statement date for every credit card."

Action Steps:

1. Identify your statement and due dates for each credit card.
2. Pay down balances to below 10% of the credit limit a few days before the statement date.
3. Adjust payment schedules if necessary to ensure low utilization is reported.

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Strategy 3: Challenge Charged-Off Accounts

[37:42] Shonda Martin:
"Charge-offs are severe derogatory marks on your credit report, but many are inaccurately reported. Properly challenging these can remove significant negative impacts."

Key Points:

• Understanding Charge-Offs:
  [37:20] Shonda Martin:
  "Every late payment, including those on student loans, counts towards your payment history."

• Legal Grounds for Disputing:
  [44:11] Shonda Martin:
  "Utilize the Truth in Lending Act (TILA) to challenge inaccurately reported charge-offs by demanding proof of ownership and correct reporting."

• Dispute Process:

  1. Obtain your official credit reports from annualcreditreport.com.
  2. Identify inaccuracies in charge-off listings.
  3. Send a detailed dispute letter citing TILA statutes, requesting verification or removal.

Notable Quote:
[48:00] Shonda Martin:
"Over 70% of the time, charge-offs are inaccurately reported and can be removed with proper dispute methods."

Action Steps:

1. Download your official credit reports.
2. Review charge-offs for accuracy, ensuring all information is correct.
3. If discrepancies are found, file a dispute with the credit bureaus using a formal letter referencing TILA.

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Strategy 4: Increase Credit Limits

[49:09] Shonda Martin:
"Increasing your credit limits can positively impact your credit utilization ratio, thereby boosting your credit score."

Key Points:

• Benefits of Higher Credit Limits:
  [49:09] Shonda Martin:
  "A higher credit limit with the same spending lowers your credit utilization, enhancing your credit profile."

• Timing and Strategy:
  [49:09] Shonda Martin:
  "Request a credit limit increase before applying for new credit to ensure higher borrowing power and favorable credit applications."

• Lender Perception:
  [52:06] Shonda Martin:
  "Consistently increasing your credit limits signals to lenders that you are a responsible borrower, improving approval chances for new credit lines."

Notable Quote:
[52:06] Shonda Martin:
"Every time you apply for a new credit card, a higher existing credit limit can make a significant difference in your application’s success."

Action Steps:

1. Evaluate existing credit cards to identify those eligible for a credit limit increase.
2. Request limit increases, ideally several times a year, to build a robust credit profile.
3. Avoid applying for new credit before obtaining higher limits on current cards.

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Strategy 5: [Not Clearly Covered in Transcript]

While the transcript provided does not clearly outline a fifth strategy, it's common for credit improvement discussions to include strategies such as diversifying credit mix, maintaining long-term credit accounts, or minimizing hard inquiries. If applicable, listeners should consult the full episode for comprehensive strategies.

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Conclusion

Shonda Martin's expert insights provide a clear roadmap for listeners aiming to enhance their credit scores swiftly. By targeting late payments, strategically lowering credit utilization, challenging inaccurate charge-offs, and increasing credit limits, individuals can significantly improve their financial standing. Implementing these strategies requires disciplined financial habits and proactive communication with creditors, but the rewards—better credit scores and increased borrowing power—are well worth the effort.

Final Notable Quote:
[37:31] Shonda Martin:
"If you do not have at least a 680 credit score, then there is something very wrong within your payment history or your credit utilization. It needs to be addressed immediately."

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Resources Mentioned:

• Annual Credit Report: annualcreditreport.com
• Goodwill Adjustment Letters: Templates and guides available during the episode.

Disclaimer: Financial decisions involve risk and it's recommended to consult with a financial advisor for personalized advice.

Transcript

[Rashad Bilal]

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[Troy Millings]

Yeah, yeah. We live. We live. What's going on, y'all?

[Shonda Martin]

Sir, what's the deal?

[Troy Millings]

Thursday. I'm Thursday. How you feeling?

[Shonda Martin]

Good.

[Troy Millings]

Good. There was a lot of prayers out there for you.

[Shonda Martin]

Appreciate it.

[Troy Millings]

Yeah, yeah. I stopped by the little high school. They was like, yo, you okay? I'm like, I'm good. They like shot you. Okay. I'm like, fighting. He fighting. Apple K. Getting there. We all right, y'all. We getting there. Shout out to everybody that sent their prayers, man. Everything looking better on the up and up.

[Shonda Martin]

Yeah, sure. So we back another great live ahead. We're gonna be going over how to improve your credit. Pretty straightforward as fast as possible. And that's something that obviously is vitally important in life. You know, a lot of people might have made a bad decision here and there. Just got caught up. They didn't realize that they paid a bill too late and, you know, want to buy a home now or want to get a car or do a variety of different things. And your credit score is stopping you or slowing down the process. So improving your credit score is something that's very, very beneficial and helpful. So we're going to bring our guest on in a minute, Shonda Martin, somebody that's. She's been at Invest Fest. She's done episodes, she's done events with us when we was in Oakland with Chase. So expert in the field of somebody that's just been, like, a really good communicator as far as helping people and teaching people, like, you know, no gimmicks, no, you know, strings attached. Just like real information that's important, especially in this space. A lot of times there's, you know, a lot of strings attached when it comes to the credit situation, but this is straightforward. So we're gonna be getting into it. But before we do, do remember, if you haven't get your copy, you deserve to be rich. Yeah, it was vitally important. You know, that's the blueprint for financial freedom. We put together New York Times bestseller, that's a fact, in less than a week. It's been out for around two and a half weeks now. So shout out to everybody that did get a copy, downloadable version, hard copy, large print, everything that you could think of, man. But yeah, don't forget, man, that's something that, you know, timeless piece of work that you could pass, you can give to other people. You can gift it. Vitally important. So get your copy of you deserve to be rich. New York Times bestseller.

[Troy Millings]

And when you purchase it, man, we love shout out to everybody that's been showing love, posting the book, tagging us in it. I'm trying to post as many as possible. We appreciate the love, but we got to keep this thing going. So when people ask us, where do I start? Where do I start? My new answer going forward is, you deserve to be rich. Everything you need is inside that book to get your game on track. And so we, we hope that you get it, enjoy it, but most importantly, implement and execute on the information inside. Got to do it. Got to do it.

[Shonda Martin]

Yes, sir. All right, so now we're going to bring our guest up.

[Guest Expert]

Let's do it.

[Rashad Bilal]

Let's do it.

[Troy Millings]

Let's do it.

[Guest Expert]

Hey, hey, hey, hey, hey, hey.

[Troy Millings]

What's going on? How you feeling?

[Guest Expert]

I'm good. I'm excited. I'm excited, man. Listen, I love talking about credit. I love teaching people how to, you know, improve their credit score. So I'm in seven heaven right now. Like, I'm ready.

[Troy Millings]

Yeah. Our audience loves every time you are on the platform, you notice A pattern here. These numbers go crazy because every credit is something that we don't know a lot of information about, but we definitely need it. And if we have it, we definitely need to improve it or find ways to improve it and update ourselves on it because the information changes. Information changes from the year to year.

[Rashad Bilal]

So I'm happy we have you.

[Guest Expert]

Yes. No, I'm excited. And shout out to yeah Y audience because I feel like they just get me. They always show me love and. Yeah. And. And. And they're action takers. Like, that's my. Probably my favorite part about them. It's nothing better than, like, providing information or resources and being able to witness the person actually implementing those changes. Nothing better. So I'm all for it.

[Shonda Martin]

That's a fact. That's a fact. So, okay, we're gonna get into it. I know we got a lot to talk about, so I'll let you. I'll let you. I'll let you kick it off.

[Guest Expert]

Okay. So first I want to say that I was tasked with probably the hardest, most simplest task ever, and that was accumulate a list or a set of tips to help people boost their credit scores. Now, as an expert in the field with all of my experience, it should be like, super easy. Like, that question is, like, it should be super easy. But for me, questions like that always pose like, the hardest. Like, it's always the hardest for me because I always want to make sure that I am giving actionable advice that is not only practical, but it isn't like, they can start implementing it immediately. And that's usually like, that's the. The lane that I like to take. And I wanted to also approach this with, like, not. Not necessarily, like, surface level information that, like, people can just go on Google or have been hearing routinely. Like, I want really take a, Take a. A look back at, like, at all of my most consistent strategies that just work and are tried and true and that I'm willing to bet the form on. And I've been able to compile a list, a pretty extensive list of a very strategic but actionable and specific key points that I want to focus on today. So, again, I'm excited, but like I said, it was hard.

[Troy Millings]

And that's why we appreciate you because your attention to detail, but more importantly, you care about people and you care about their results. And so, again, we're happy to have you, man. So where do we start? Where you want to start.

[Guest Expert]

Where do we start? Okay, that's a loaded question. Now, when it comes to credit scores, a lot of Time people are often only focused on like the numerical value of their score, like their credit score. I want to get a 7, 700 credit score. I want to get 800 credit score is usually like the request that I, that I receive daily. But I'm a big, big, big believer of focusing on your credit profile. Strengthening that it does more for not only your credit score, but your borrowing power overall and your entire credit standing. So every time that I approach advising someone on how to repair or improve their credit score, it is never solely based on points. So I, I, I just wanted to say that first and also in order for anything that I'm going to say to make sense, you have to, the, the audience has to be willing to unlearn certain, certain things that we've been accustomed to when it comes to, like the credit game that are just flat out wrong. Right. And so yes, I wanted to first give that disclaimer before we kind of get into these tips. And if you guys are ready, I can, I can already, I can start with, with, I'll start with the most effective one or the, or the, or the one that will cause the most immediate boost.

[Shonda Martin]

Yeah, let's do it.

[Troy Millings]

Let's get it going. Let's do it.

[Guest Expert]

All right. So my first, my number one non conventional tip that I would recommend for a person seeking to boost their credit rating is to, number one, target the late payments. The reason why you want to target delay payments anytime you are trying to improve your credit score is because of the impact that the payment history has on our credit scores. Because it's the largest factor. It's responsible for 35% of our credit score. Also, it holds over 192.5 points. So we want to get as many of those points as possible in order to reach a high credit score. So with that being said, the first thing that everyone needs to evaluate on their credit report when they're seeking immediate change in their credit score is trying to reverse the impact of the late payments that they have on their credit report. This happens only one way. So the way that they would do that is because late payments are the number one reason people will lose 50 to 100 points per instance sometimes. And like I said, because it's the largest factor. The only way to undo that impact or neutralize the effects is to flood their reports with on time payments. How to do that, it's very, it's easy. If you think of it from this lens, think of, I call it the 11 to 1 rule. Right? So what that means is for every single late payment that is reporting on their credit report within the last three years. They're going to need 11 on time payments to neutralize that negative impact on their score. How do they get that? You can do it by multiple ways. Number one, you can allow time to pass. You know, that's About a year, 11 months is about a year before most late payments will neutralize. But being super, super strategic and intentional about making sure that they are trying to cancel out delay payments within the last three years by specifically making sure that they have accounts that are currently reporting every single month to every single credit bureaus in on time payment. And it has to be within that same category. So what that means is like if they have two late payments on a credit card within the last two years, then their goal is for the next 11 months is to get 22. What is that? Yeah, 22 on time payments reported within a credit card account. Right. It doesn't have to be the same account, it just has to be the same type. Does that make sense?

[Troy Millings]

I'm with you. I'm with you.

[Guest Expert]

Okay. Then the next thing that they would do to target late payments on their credit report is to request a goodwill adjustment from their lender. Right now there are going to be some payments that they will struggle with getting removed or some payments that they probably will not be able to amass enough on time payments in a timely fashion, depending on how many that they have. So my rule of thumb is for any accounts that that is still open so it's still reporting, you still have a standing relationship with the creditor, you would, you should always request a goodwill adjustment from them. And that's simply just going to the creditor saying hey, I made a mistake. You know, I was late. I'm not denying it. Things came up, things happened. I learned. Will you, Are you willing to, to erase the, that late payment record from my credit report? And that's called a goodwill adjustment. Now a lot of lenders will, will, will grant this. Capital One is one company. Credit One is one company that, that are not, that is notorious for accepting and honoring goodwill request. Right. So yes, if you have Capital One, you have Credit One or any bank that you have, make sure you are mailing a goodwill request ladder to the creditor to ask for a goodwill adjustment for every single late payment within the last three years. Right. So that's, that's, that's sort of like the first tip all in one was, it was two tips all in one, which is to target your. The late payments within the last three years and trying to erase as many of those as possible.

[Troy Millings]

So, so the goodwill adjustment, this is a one time letter that can knock out a few payments, right? So this is not like I was late once. Can you forgive me once? I might have been late four times in 2024. I'm sending this letter on behalf of 2024 for this adjustment. Can you forgive all four?

[Guest Expert]

Is that correct? Yeah, you are correct. So you can ask, you can technically ask for any amount right. Now keep in mind, granting a goodwill letter is up to. The company is at their, you know, they, they can decide to obviously deny it and it is based on like the, the history that you are building with them. So they can say no. However I want to, if you guys don't mind, I want to show an example of a, a template that they can use to send. All they have to do is plug and play their information and send it to their creditor. And so let me share that really quick. And it's just a good letter to have just in, in your file just in case, you know. So are you guys able to see that clearly?

[Troy Millings]

Yeah, yeah, we got it.

[Guest Expert]

Okay, good. So. Yes, so this is an example of a perfect formatted goodwill template. Right. All they would do is obviously the red writing. They would replace it with their information and, and then send it via mail. Either send it via mail with, with only one exception, if they have access to the CEO's email address, which is a hugely slept on method of, of goodwill adjustments. That burns me that people don't utilize that method, however. Yeah, so just send a goodwill letter, send it in the mail or if you have access to the, the executive or CEO, CEO's email address, then just send it directly to the, to the email. And yeah, so you would do that for each late payment. You can, you can, if, if you have seven late payments, you can literally fill out seven of these. Or if they're with the same, if they're on the same account, of course then you could just list them all out. You want to specifically focus on the late payments within the last three years because those are the ones that's like weighing the, the heaviest on your score, affecting your borrowing power the most and really are like probably the reason why your like a person's score is just stagnant or you know, being affected the most. So targeting late payments within the last three years is rule number one. That's going to. Any late payment, any single instance of a late payment that is removed, that is forgiven, they stand to see an increase of 30 to 60 points per late payment. It's that big of a deal. And as I stated, you would be so surprised to see how often the goodwill requests are granted and also how effective the making sure that you are flooding your credit report with on time payments to neutralize previous late payments. How effective that method is in the night and day difference that it makes on, you know, within a person's credit profile. So that's like rule number one, target late payments within the last three years.

[Troy Millings]

All right, so I, I got a second, a follow up, right. So I got the, the goodwill adjustment letter, right. But sometimes I might have paid it and it registered as a late payment.

[Rashad Bilal]

How do I dispute, how do I.

[Troy Millings]

Try to get that error off of the report? Right? Because sometimes it's not my error. It might be on the lender's error.

[Guest Expert]

So you was it by way of a mistake. So you were not late, but some, somehow, some way they reported you late.

[Troy Millings]

Or they reported me late, but it really wasn't.

[Guest Expert]

Oh well, if it was their fault, then that should you, you definitely need to take that up with the company first, like request that they send you a copy of your records, your payment record, or if you have proof that you paid it. So like if you pay with your bank account or credit card and you have a record of you paying off your credit card in a timely fashion, then you can just go ahead and send the proof to the credit bureaus letting them know that you know the company is wrong. But if you don't have proof of it, you are at the, you are, you're at the mercy of them providing you their records and you know you are going against them. So they can definitely be like, well no, we don't have a record of it, you know, so it's always best to obviously keep our own documentation because yeah, they, they're never on our side when, when we're up against them.

[Troy Millings]

Document the process. Gotcha.

[Guest Expert]

Document. Keep, Keep everything. Keep everything.

[Shonda Martin]

Okay. All right. So that would be the first step.

[Guest Expert]

First step, yes. And then the, the next, the next thing that I would advise that would, like I said, make the most immediate or biggest impact on one's credit score. It would be. So I want to first frame this one. The next tip is relaying to credit utilization as well. However, it's in a different capacity. So what I mean by that is like my second tip is to lower your lower, Let me rephrase that. Lower your credit utilization before their next statement date. Right. And what that does, or just in general learning how to Properly pay your credit card. Learning how to pay your credit card in a way that it maximizes your credit score and increases your borrowing worthiness will always be something that, like, I, like I always say everyone that has a credit card needs to know how to properly pay a credit card and needs to know that there is a strategic way of paying it that aids to increasing your credit score. And the, the stereotypical or the standard way that we are paying our credit cards actually leaves about 80 points on the table that most people can literally access within 30 to 60 days by just reframing how they are paying their credit cards. And obviously I'm, I'll get into exactly how, but let me put an example on the screen. Give me one moment just to make it make a little more sense. But okay. Now when it, when it comes to, when it comes to paying off your credit card, the first, the, the first thing that I need everyone to evaluate for every single credit card that they have is to identify these two important dates. The first date is. The first date I want them to identify is their due date. That's. That's not.

[Troy Millings]

Yeah.

[Guest Expert]

The first day I want them to identify as their due date. It's not up yet. And then the second date I want them to identify is their statement date. And understanding the difference, the biggest difference between these two dates makes the biggest difference in your credit score because your statement date is the dates that will determine how many credit points you are getting as a result of your credit utilization. And then your due date only matters to your bank. It does not affect your credit score. It does, it does not affect how your credit cards are reporting. So that, that, that is not the date that is important. The date that is important is your statement date. Right. And that, and it's so important to the, to the fact that, like, if you are not ensuring that your balance is below 10% of your credit limit at least two to three days prior to your statement date, then you are leaving a wealth of points on the floor. You are leaving a wealth of points just sitting there. And you are not being credited for really having that credit card. Right. So I can, I can either go through how I typically pay my credit cards or if you guys have, like, a specific question in regards to, like, the differences of it, I can, you know.

[Shonda Martin]

Yeah, I think if you go through how you do it, that would be helpful for sure.

[Guest Expert]

Okay, cool. Now what I do is there's two golden rules that I have for my credit cards is I have, I have a rule that by my, by my due date, I make sure that my balance is zeroed. So I zero out my credit card by my due date. And that's simply because I want to avoid paying interest. Right? So that's just a, that's a personal quorum for me. I don't like paying unnecessary fees. Right. However, that doesn't help my credit when it specifically comes to my credit report. I also, I also make sure that three days prior to my statement date in every billing cycle, so every month that I have reduced my balance down to 10 or reduced my balance down to under 10%. And that way I can ensure that the balance that's being reported to the credit bureaus is favorable. And also it is, it is, it is showing that I am a responsible borrower. I not only use my credit card, but I, I can be trusted to pay it back. Right? That's super important. Most people are usually under the guise that as long as they pay their credit cards by their due date, then they're good. Right? And also, or the other thing that I see is a person would zero out their, their credit cards on their due date and then not necessarily have any, any inclination that how important their statement date is. So they don't, they don't even, they, they don't even care what their balance is on their statement date because they're unaware that that payment that they made on their due date is not being credited for their, and used as their utilization like I think. So that's, that's pretty much like the, the golden rule with credit cards. You just have to make sure that your statement date is being prioritized. Prioritized. Like you have to make sure you, you are prioritizing the balance that your credit card is reporting on your statement date. And I always say if you don't, if you, if you don't know or understand this, look at your most recent credit card statement, right? On your credit card statement, you will have what's called a statement balance. That's required for every credit card statement. Your statement balance, that is your utilization that was reported to the credit bureaus from that bank the month prior. Right? So anytime you ever wonder what your utilization is, all you have to do is look at your most recent credit card statement because your statement balance is your utilization. That statement balance is important because that's the key to unlocking as many points as possible within the credit utilization category. Right? Which lends to 165 points. So we need all of those points was as many of them as possible. And the only way that you you'll have access to majority of those points is if you are strategically paying your credit card based on your statement date and obviously keeping a low utilization. Low is not 30%. Low is not anything other than what's considered good and low to to. To lenders is literally between 1 and 9%. That is like the pristine range, the most optimal range. That is the range that if you are wanting or seeking to improve your credit score. If you, if you are reporting anything above 9% repeatedly on your credit, on your as your credit utilization then you, you are not going to increase your credit score. Like it's just you are. You, you don't, you don't want to increase your credit score because it just won't happen. Now you may get a few points here and there. However, if you want to see a real change in your credit score, making sure that you are reporting between 1 and 9% by your statement date for every credit card that's what's going to unlock like that next level of of credit for for any, any literally any profile.

[Troy Millings]

This is, this is that pretty tricky right? Because again you and I like what you said there between 1 to 9%. You didn't say 0%. Right. So most people that will just say I'm gonna use my credit card, I'm gonna pay it off. Right? I'm gonna use my credit card, I'm gonna pay the whole thing off. Probably not the best method if you're trying to increase your credit score because it doesn't really show there's a payment history. Right. They actually want you to have some left over right between that 1 to 9% so that you could continuously pay all pay them every month. Right. Paying off the balance every month is.

[Rashad Bilal]

Not the best solution people.

[Troy Millings]

It's like confusing. What's your thoughts around that?

[Guest Expert]

Oh no, you were spot on. You were certainly spot on because yeah that is a common misconception that people have when it comes to credit cards is like reporting a zero dollar balance is good or a lender would like prefer that and it nothing can be further from the truth. In fact I'll show you a visual to make it easier for someone to like understand how lenders view credit Credit credit utilization ratios like they're super important and like I said is this is probably the number one thing that affects borrowing power in terms of like credit card limits the interest rates that that one would receive when they're applying for anything. So if you, if you're a person that finds your only being approved for up to a certain amount or never being able to cross a certain threshold or tier when it comes to borrowing, it's usually probably because of your utilization. And I'm pulling up that chart right now.

[Shonda Martin]

And for the, while you're doing that, like for the statement date, can a statement date just be the same day as your payment date, as the due date?

[Guest Expert]

No. So they're, they're, they're different. Your statement date is, can you make.

[Shonda Martin]

It the same day?

[Guest Expert]

Oh, actually some banks will allow you, so it's, it's up to the bank and some banks will, will refuse it. But like, honestly a lot of banks will allow you because they want your, they want your dates to be, to make sense for you. They want whatever's best for you to pay them back. They are usually willing to like accommodate that request. So I acts. And also that brings me to another point. If your credit card statement date or your due date is during a time of the month where like you don't tip, you don't typically have extra finances, if it's right after you have to pay like a large bill like rent or something like that, you are able to request for your, your dates to change your payment dates to change on your credit cards. Do what is best for you, do what is, do what will help you to actually pay the, pay the bill, you know, like so. Yeah, that, I'm glad you brought that point up.

[Troy Millings]

Yeah. If you ever had an American Express, you, you definitely are familiar with that. Like that. And that takes a while to even figure out. Like what the statement dates are, is between the 25th to the 24th and then the due date. Obviously you know, you can change it if it's mid month. Like you said, a lot of people get paid bi weekly. Some people get paid monthly. Having the 15th as that offsetting day gives you some time or the 16th gives you some time to get that money into the account. But yet they're two different things. Man. I'm glad you brought that up.

[Guest Expert]

Very important things they are. And I'm showing a screenshot. Let me know when you guys can see it. Can you, Are you able to see that?

[Troy Millings]

Yep, we got it.

[Guest Expert]

Okay, perfect. So this is, this is just a quick key, a quick reference point that everyone needs to remember when it comes to paying your credit card and understanding utilization tiers and how they impact our credit scores. Now your credit utilization will affect both your credit score as well as your borrowing power. Like I said, affects pretty much everything with credit. So it's super important that you understand it. Reporting the wrong utilization can cost 40 plus points. And when I say wrong utilization, I want to stress how the wrong utilization is quite literally what we are taught. So it's, it's, it's, it's the normal advice. So majority of consumers are following the wrong utilization advice. And, and that's the, the stand, the industry standard of making sure that you report 30 of your credit profile or 30 of your credit utilization or making sure that you stay under 30 and you are fine. No, if you look on this list, you would notice that 30 is red. 30% is, is, is considered risky. Right? The next tip will go a little more into detail about utilization specifically. But I cannot stress how important it is if like I, I keep on saying, if you are a person that is seeking to improve your credit, then do not go, do not go past 9%. Don't go past this second level. If you want, if you want to actually see a difference in your credit profile, that's, that's just, just stop right there. Because anything above that then you are losing points. You are losing points. You're not maximizing the points that you are receiving for your credit utilization. You're just leaving points on the table. Right? So this is, this is just kind of like my, my standard advice when it comes to, to the tiers, right?

[Troy Millings]

Yeah. Sean, a quick question because, and it might be some people who are not even familiar with don't know their credit score. Number one, not knowing that they can access, access it for free. But number two, what is the range now? Right, because I remember 800 was, the max score is 850 now the max score like that's being the highest. This is really a trust system, right? How much the banks trust you will determine how high your score is. What's the range that that data falls into now?

[Guest Expert]

Oh yeah, so credit scores range between 300, which is the lowest in 850. The reason why it's 850 is because like the, the, the most, the Wiley most widely accepted version of our FICO scores goes off that 850. So we kind of just, you know, accept it as like the standard. So yeah, so between 300 and 850 can't go below 300, can't surpass 850. So we, we're giving 300 points. So it doesn't matter how bad your credit report is or your credit, how many collections you have, you cannot go under 300 credit points. Right? So the goal, the, the entire point and goal of maintaining or obtaining good credit is seeking to get as close to 850 as possible. Which math wise, that's just that the difference between 300 and 850 is just 550 points, right? So if you think of credit, if you think about, if we think about credit scores in net capacity, where you, you, you realize that there, there are five that you could potentially get, right? And those 550 points are broken down into five separate categories, which is payment history. Payment history Is, takes up 192.5 of those of those 550 points. Credit utilization takes up 165. Credit age takes up 82.5. And then credit Mix and hard inquiries both take up 55 each. So if you add each of those categories together, it'll equal 550 points, right? And in order to get a perfect credit score, you would have to have a perfect credit report and not have any derogatories or be missing any of those points. There's no reason to aim for a 50 credit score anyway. But that is the highest possibility. Now I always, when it comes to boosting credit scores and increasing your credit scores, I mainly focus on the top two categories, which is payment history and credit utilization. Because just mathematically, if you are doing even moderately good, and when I say moderately, I'm, I'm talking, let's just say, for example, 60 or 70 to 75% doing good in those areas and getting about, you know, 75% of those available points, then the lowest that your credit score can even reach is a 680. Right? And in case, in case someone is not familiar with how credit score ranges are graded, a 680 is the lowest possible score to be considered to have good credit. Right? So that's like the floor of what's considered a good credit profile or a good credit score. And I want to stress that, I want to stress that point because I always tell people that if you do not have at least a 680 credit score, then there is something very wrong within your payment history or your credit utilization. It needs to be addressed immediately because as long as you fix that or, or pay attention and be intentional about fixing whatever it is within your payment history or your credit utilization, which off the back I'm just going from my experience is usually high utilization, utilization above 30% or late payments within the last 24 months. Those are the top two reasons why somebody usually does not have a 680 credit score score. If those two things are not, does not apply to someone and they have below a 680 credit score, then it's Usually like, maybe they had like, like a bankruptcy or something, like something like drastic. But if you don't have at least a 680, then there, there are very actionable and practical easy changes and switches that you just need to make like what we're going over today and you can get a 680 within. I don't want to promise a certain time limit because it depends on a profile, but very quickly, very quickly.

[Troy Millings]

Yeah. Now, late payments, student loans count inside of those late payments.

[Guest Expert]

Yes. Every, every account on your credit report. Actually every late payment on your credit report counts towards your payment bank or, you know, your late payments. So yeah, no matter how old, by.

[Troy Millings]

The way, pandemic, we had that pause. Make sure you're paying your student loans. So we got target late payments, number one. We got lower utilization number two. What we got at number three.

[Guest Expert]

Number three. So this definitely is going to require a visual because I want to make sure that people are following it because it's a little more nuanced than the last one. Hold on, give me one. I'm actually, I'm gonna focus on one other one before I hit that one. Just gotcha for easier explanation. All right, now the next tip or credit strategy that I would recommend to a person who is trying to increase their credit score within the next year. This is one of my low key favorite ones because it's one of the ones that is usually never, ever, ever thought of or mentioned or even taught. This is specifically for people who have charged off accounts. Right now at the mention of charge offs, there are so many people that probably had a visceral reaction like, I'm not getting the charge off remove. Just the reputation of a charge off is usually attributed to that being the hardest account type to remove. Get removed from your credit report. Right. That's one of the worst credit instances or the worst types of derogatory accounts that, that is on our credit reports and it causes a lot of damage. Right. And so most people, they either try to dispute that account, but most people don't have luck with getting them deleted. But that's simply because they usually disputing it incorrectly. Right. Now, I didn't want to get much into credit repair or credit dispute tactics. However, this one is worth mentioning. If you have a charge off on your credit report. What I need you to do is, number one, you need to download your official credit report. You would do so by going to annualcreditreport.com it is free. You get, you get a free copy of all three of your credit reports. You need your official credit report and not like a credit monitoring app to specifically because our official credit reports contain so, so much more information in details about each account. Right. And that information is what you will use and what you will need to determine if that charge off is considered valid. Right. Now the second thing that I want want them to do is once they get their credit reports, look at their, look at their charged off account and look at how it's reporting on their credit report. And they need to determine, they need to look for two things. The first thing that they need to look for is if that charged off account is state. If that charge off account still is carrying a balance, right. Is it reporting a balance? Does it say $0 or does it still, if it was a repossession that was charged off, for example, does it say you still owe $12,000 or whatever on that account? Right. So determine how, determine the balance on that charged off account. Okay. If that charged off account has a balance that has been updated after the account was charged off, then you need to challenge that. Most people are, most people don't challenge charge charge offs correctly. They usually challenge it the standard way that we challenge our credit report which is usually like based off either random letter templates that they found online or mainly focus on the FCRA laws, which is the Fair Credit Reporting act. And those are just a host of consumer laws that we usually, you know, use to challenge credit reports with charge off. Specifically there is a set of statutes that every consumer needs to be aware of. Right. And without over complicating it or being too technical with it, I definitely know that it's important that they under that, that they, that they get this. So I want to make sure. Hold on. That I am showing it just for them to screenshot if anything. Can you see it? Yeah. All right. Now this is the four, four step process on how to properly challenge a charge off. And the reason why I'm placing so much emphasis on challenging charge offs is because something that, that most people don't know is most charge offs that are reporting on our credit report, they are valid charge offs meaning they are that person's account, the account was charged off. I'm sure they did owe the, the, the, the lender. Right. That's not what we are disputing. However a part that is often missed, understood or left out is while a charge, while most charge offs are valid, most are not accurate. And there is a big difference between a charge off being deemed valid and accurate. It's the difference of a person Getting pulled over with a expired license. They have a license, it's their information is their address. However the status of that license make, you know, makes it illegal, right? Like it doesn't, it doesn't matter that the information is correct. That's, that's sort of the same thing that happens with charge off. Specifically getting a charge off removed from your credit report legally, I want to place emphasis on that legally. And doing it the proper way can, can cause a hundred plus point increase in on in a person's credit score and it does wonders for your borrowing power. Especially if you are trying to buy a home, specifically trying to buy a home, trying to buy a car or pursuing any sort of installment based loan. Charge offs affect those drastically. So it's super important that everyone knows how to properly challenge charge offs because those are according to the, the most recent FICO report charge offs. Charge offs were actually the second largest quantitative item that was on consumers credit report that contained derogatory accounts which was insane. It's insane. This is the first time that's ever happened in, in the history of, since I've been doing it. But there are so many, there are so many illegal charge offs that are affecting our credit reports. So as long as they follow these steps which is getting, getting a copy of their official credit reports and just going through this list. I don't know if you guys want me to read through it, but just going through this list looking for two specific things and yeah yeah, let's, let's.

[Shonda Martin]

Go through because some people might be listening to audio, they might not.

[Guest Expert]

Okay, yeah yeah, perfect. Okay yeah, I can definitely do that. Okay. So the, the statues that everyone needs to be aware of and that, that, that they will use in order to properly challenge a charge off is called the, it's, it's acronym, that's tila. Right now this is the stat, the law, the set of statutes rather that is the Truth in Lending Act. So it as an overview it deals heavily with the acquirement of a debt or how lenders are possessing a debt more so than like reporting on a credit report. So the process in which a lender is used matters the most if lenders fail to do prerequisite things before charging off an account. Things as simple as giving you sending you a letter in writing, a warning, right? Like they legally have to do that. They have to send you a warning before they charge off an account. They have to give you a chance to, to make, to, to bring the account current. They have to give you a chance to settle the account and then they also after, after these are three notices by the way. And also after that, before they reported to the credit bureaus, they have to have tried to contact you at least 10 on 10 instances. Right. And I'm just going to say 90% of companies do not ever follow that process to the T and the burden of proof is on them. So I always tell like, don't even try to stress yourself out. Like did they send me? No, no, the burden of proof is on them. So what you do is you utilize your consumer rights that are rightly attributed to you and you request that they provide proof that they have done all of those things. Providing proof is demanding that they, they send proof of ownership. Right. Another one of, one of the other biggest instances with charged off accounts is the original creditor selling the account to a collection agency but not properly withdrawing ownership of that account. I want to say, according two years ago, I think it was somewhere along the line of like 63, 63% of charged off accounts that were in the hands of collection agencies. They, they didn't even own them properly. Like they did not legally own them. And although they was collecting on a debt, harassing citizens, they didn't even legally own them. All it would have took is as a consumer for us to demand what's called proof of ownership and that account would have to legally get removed. It doesn't matter how much you owe it. Like none of that matters. So the, the number one thing is demanding that they prove the ownership of the account, demanding that these, these instances did not happen. Which, which is interest being added after the account was charged off. That is illegal. That happens a lot. Late fees being applied after the charge off. That also happens a lot because they'll add like attorney fees and things of that nature. They cannot do that incorrect balance calculation, so they're inflating it with interest. And like I said, different sort of fees happens a lot. Unclear breakdown. So like if they don't send you an itemized list of every single cent item on that account, they can't legally claim that you owe them that. So yeah, those are the main instances that, that a company would have to prove that is accurate. And like I said, Over 70% of the times it's not. So use that information, use the statutes that's presented before you and challenge that by sending a letter to the credit bureaus saying exactly what I said.

[Troy Millings]

The more you know.

[Guest Expert]

Yes, next to.

[Shonda Martin]

Good to know, good to know. And, and that happens usually based off of like when is those type of situations even Happen far as.

[Guest Expert]

So it takes, it usually takes about six months for an account to be charged off. So six months of failure to pay for an account. If you have a credit card that you have just let go of, have not made a payment within, you know, a few months, a company will usually charge it off at six months. However, they can charge off an account as soon as a. 90 days, you know, 90 days late. Right. But most, most companies will wait until at least six months. So I do give you a while to, to, you know, to make right on the account. However, even still after they chart because they, they didn't properly notify you and, and follow all of the steps that they are supposed to, a lot of them are not legal. And so yes people, that one is so important because the amount of charge offs that I see get deleted and removed from credit reports on a weekly basis by a simple letter is outstanding. Like it. I will never get over it.

[Shonda Martin]

Yeah.

[Guest Expert]

So one of the, another way that you can increase your credit score is by increasing your credit limits because that impacts like your credit utilization and it, it helps you to have the more credit you have available to you then the higher your borrowing power is and it just increases, it just, it just improves your credit profile all around. Right. So one of the tips that I always recommend, and I love recommending is increasing your credit limits before applying for new credit. So that seems so simple. But the reason why somebody would somebody should do this is before they apply for a new credit card. So if you know that you are applying for a credit card before you apply for that credit card, look at all of your existing credit cards and see if you qualify for a credit limit increase. That's simply because you have to understand that every single time you apply for a credit card, your lender who you are applying with, they will take a survey of all of your current credit card accounts and whatever your average limit is or whatever, they will base your approved amount off of what you already have on your credit report. Right. That's one. So you, if you only have credit cards under $1500, it's very rare and unlikely that a new lender would trust you with $10,000 or $20,000. Right. It is always best to seek to first increase your current credit limits before you apply for a new credit card. In fact, a huge red flag to lenders is if you are, if your credit limit is not increasing, that is a red flag to new lenders and often a reason why they will deny you for their credit card because that's risky why have you had that credit card since for example 2000, whatever 2009 and the limit is still $500 or the limit is still a thousand dollars, right? This is why I tell everyone when you have a credit card there should not. There should there should never be a full year that surpasses that you do not have or have not received at the very least one credit limit increase. But really you you could have received two plus at least two a year. That is a standard operation on credit cards. How banking credit limit increases work that is so standard two is very minimal in the usual the usual method or I'm sorry, the usual. You worked hard to lay the foundation for your contracting business and when you're with Amex Business Platinum, you can keep building it up with a flexible spending limit that adapts with your business. And since you earn 5 times Membership Rewards points on flights and prepaid hotels booked on amextravel.com, you get even more from on site overseeing. That's the powerful backing of American Express. Not all purchases will be approved. Terms apply.

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