Juliana Mariah - Empowering Moms + Fulfilling College Students Dreams

If you are reading this post, you will learn what it takes to have good credit so that you can purchase a car, a home and build your credit up!

I learned about credit from my dad when I was about 18 years old. The reality is, some of us are not able to save enough to pay something off right away. Most of us need credit anyways if we want to be able to buy a home. You need to know that there is a way you can do this that can help you have good credit!

There are many great things that great credit can do for you. It will help you out when you buy a car, buy a home, and allow you to have a low-interest rate on almost anything you purchase.

Since I’ve always cared SO MUCH about my credit score, I have been able to buy a new car at 21. Plus, purchase TWO homes by the age of 27! For this reason, I care so much about teaching you how to have GOOD CREDIT, actually more like GREAT CREDIT! Everyone deserves to succeed!

There are some things you need to know about your credit score first. This is honestly something I wish that they taught in high school, but luckily for you, I can share with you how to have good credit. I am sharing this because I have always had a credit score of over 700, which is REALLY GOOD, and I want you to have the same!

What is a principle?

The principle is the actual amount you owe on whatever you are paying, such as a credit card payment, car payment, etc.

What is interest?

Interest is money that you owe to the bank after your actual payment. It is something that you always want to keep to a minimum!

What is an interest rate? Why is an interest rate crucial?

Interest rate is the actual percentage of money that you are paying back to the banks after you pay the actual payment on your home, car, or credit card. Your rate can range from 1% to 30%. When you have a high credit score, you can have a low interest rate! YAY!!

My first exposure to seeing how credit scores worked and what they can do for you was when I worked at Spreen Honda as a car saleswoman. I saw people with really good credit that had a very low-interest rate on an expensive car. There were also people with bad credit but had a very HIGH-interest rate and a VERY high payment.

The individuals with LOW credit scores on an older vehicle had a payment equivalent to the individual with HIGH credit that had an expensive vehicle. This means that they were paying more to the banks than they were on their car.

The reason that credit is everything, is that it shows how much a bank can trust you. When you get a car used or new, a home, the bank determines how much they can trust you based on your credit score.

For example, when you have a high credit score, the banks will give you a lower interest rate because they feel secure that you will make your payment on time. When you have low credit, they will charge you more interest. Thank bank does this so that they do not get screwed over.

How to Increase Your Credit Score Quickly

If you have a low credit score, here are some ways you can quickly raise your score!

Pay off anything collections first
Pay your credit cards on time from now on
Overpay your credit cards after the bill, so it goes straight to the principle

What can affect my credit score?

Debt to ratio
Running your credit
Opening up multiple credit accounts
Letting others use credit in your name
Late payments
Letting outstanding bills go into collections
Years of credit established

The debt to ratio is the amount of money you make each month compared to the debt you owe.

Running your credit can happen when you buy a car, a home, rent an apartment, buy a phone, etc. Pay strong attention to the words of people who ask to run your credit.

Opening up multiple credit accounts could happen if you purchase a car or open many credit card accounts.

#1 RULE- never let someone run credit in your name. Not a friend, boyfriend or girlfriend, best friend, or anyone. This will affect you.

Late payments are payments that are made after their due date.

Collections are people who collect the debt that you owe. These collectors call you multiple times, and you pay your debt with a higher interest rate. AVOID LETTING THIS HAPPEN AT ALL COSTS.

You want to establish credit sooner rather than later. Like when you are 18! When you establish credit, you start the beginning of your trust with the banks. That trust is built when you show you can make on-time payments.

How to Have Good Credit

What is a good credit score? Anything that is a 700 or above!

How can I build good credit?

Pay your payments on time before the due date
Don’t go into unnecessary debt that you cannot afford
Avoid impulsive spending
Do not open too many credit card lines
Have a low debt to ratio
Check your credit score often
Do not let any debt fall into collections

How to Increase Your Credit Score

Making your payments on time is so important. The bank will always look at your payment history to see if you paid your payments on the due date or before the due date.

Oftentimes people go into unnecessary debt that they can’t afford. Why would someone do this? And what it boils down to is determining if what you want is a need like you actually need it or you want it. Ask yourself, do I just want this to be cool or to fit in? If it is a want then try to find a cheaper way to get a car or buy a home.

For example, when I got my first car out of high school, I used my entire savings, which wasn’t much on a new car. I had a deal with my dad that whatever I saved, he would match. Together I was able to get a $6000 truck that was ten years old. I was very proud of myself because I knew I only bought something that I could actually afford, and it was paid off.

Avoid impulsive spending. If you can’t afford a brand new vehicle, DON’T DO IT! You would have to budget for this to make sure you can always afford it, but typically people make these purchases in their career because life changes when you start a family. Buying a used car is good, you want to make sure you choose the right car!

One thing you should always know about buying a used vehicle is to avoid buying a salvaged vehicle. Especially, if it does not hold value well. You’ll end up putting more money into saving your car than doing the basic maintenance on a vehicle like an oil change, tire rotation, and alignment.

Find something that you can afford will help your credit. If you have not saved enough money for the down payment on a vehicle, then consider getting a small loan on a car that will last you a long time.

For example, you can go into Wells Fargo or your local bank to get a small personal loan on a reliable used vehicle with a clean title to see if you can get approved.

Avoid opening several credit lines. When you open a credit line, choose somewhere that is a place you love to shop. Here is the trick, that most people don’t follow. ONLY PURCHASE AN ITEM WHEN YOU CAN PACK IT BACK BEFORE THE DUE DATE OF THE SAME MONTH! Read that again.

Credit cards aren’t meant to have, so you can go into 10,000 dollars of debt! That’s a huge payment on things in your closet you will get rid of sooner or later. Choose a credit card somewhere that is valuable and build your credit line. You only need maybe two credit cards at max!

Have a low debt to ratio. Lowering your debt to ratio means that if you make $2,000/ month, you do not want to be in more than $400 overall in debt to keep a low debt to ratio. Debt is anything that you owe to the banks.

Some people make $2,000 a month and have $5000 of debt. That’s a high debt to ratio. You should make extended payments to the bank for 3-6 years that you owe because you wanted a new couch, car, purse, clothes, or anything else. KEEP YOUR DEBT LOW!

I paid off one outstanding debt and let it close on its own when it is paid off. Do not ever close a credit card account, BUT you can pay off your credit card and let it cancel once it is all paid by the creditor.

Check your credit score all the time. I check my credit on credit karma. Also, I make sure to check off my bills once they are paid. Write down a budget so that you know all of your payments are made on time. If anything is hurting your credit, you can call to dispute it usually once it is paid in full to raise your credit score.

Credit Karma will also show you if any other unknown accounts are opened in your name. Meaning someone is using your identity to open accounts in your name.

You would want to report that right away and make a claim. Keeping track of your credit is such an important thing to do!

What can go into collections? Electricity bills, hospital bills, cell phone bills, past due credit card payments, etc.

I hope this helps you, so you can keep a high credit score! Credit is everything when you turn 18 and in your future to make big purchases that are super exciting! Make sure you use these tips to keep your score about 700!