Okay, this may shock you I think your credit score is important
I think you should have a credit score and you need to build a good credit score. That's right
Not all credit is bad a FICO score is good
If you build it responsibly I'm gonna give you seven ways to build a good credit score. That's gonna help you build wealth
Now this may also surprise you I agree and disagree with Dave Ramsey, that's right
He's the Guru that's helped thousands of not millions of people get out of debt
Heck he's helped me in my life and our family. I think his teachings are great
But I think he sometimes goes too far not all debt is bad. I think there is good debt as well
It's okay to use debt if it's used carefully and wisely now is there bad debt?
Yeah, you bet credit card debt, maybe even an auto loan or student debt
We got to get out of that debt use a debt snowball
I'm all-in but we need to build our credit score and when you're young a credit score is extremely valuable
Okay, one more point here before we move on. I want to use an analogy. Let's consider
Credit as if it was a gun now as a loaded gun in the wrong hands a very dangerous item
absolutely, but is
every gun bad what happens if I have learned how to use it wisely safely and carefully and
Handle, it properly a gun can be a very powerful and safe tool. Well credits the same way in the wrong hands
It's terrible and there's a lot of people that should cut up their cards and never use credit again
I totally agree and there's a this is this message that Dave Ramsey gives it's incredible and it's life-changing
But does that make all credit bad? No, we're going to need credit to rent an apartment
Maybe buy our first home to get an SBA loan to start a business to buy a rental property. I want you to use
Large down payments and get credit wisely, but you're going to need a credit score to do that
So we've got to use a FICO score wisely to build wealth, okay?
Now the first three are pretty tricky and very intertwined
So I'm going to list them out together and then we're gonna break it down. Number one is pull your credit reports
That's an annual credit report.com. It's free and you should go there to just pull your credit reports and see what's out there
number two is hire a monitoring service and number three is
Coaching and education on your credit score credit reports and building credit
Now remember number one annual credit report.com. It's free
You want to pull it you could do it once a year and it's not going to give you you credit score
But it's going to give you what activity may exist on
Your credit and it's gonna be hard to read but you want to pull it and use it as a resource as you move through
These other steps now number two was get a monitoring service
Lots to talk about here when you get that first monitoring service. You're gonna get your credit score
Let's start there
The credit score can be a moving target and and you need to realize that and not get frustrated by it
This is where I've learned from my hero and credit reporting Erik counts
He's at credit nerds calm and I quote him in some of my best-selling books
What he has taught me is an important point that a credit score doesn't get you credit
But a bad credit score can keep you away from any credit at all
So that's why the credit score matters because it's not getting you credit
It's just getting you to the point where you can apply for credit
another way of looking at it is an
Analogy that Erik taught me and that is think if you wrote an essay and you took your essay to three different professors
They're gonna grade it three different ways, right? You're gonna get three different scores or grades. Well, that's how your credit score works
In fact, there's 56 different ways. Your credit score can be analyzed
So you don't want to get frustrated you got to remember that the credit score is going to be a moving target
and you're gonna want to build your credit report with good habits and responsibility and that's what's gonna
Create this this credit picture for different lenders to look at and that's okay
So remember you're gonna pull those credit reports
You're going to get a monitoring service
now it's off to that coaching and learning now coaching is an important part of these steps because you need the help of
Professionals that look at credit reports every day
They know how to read these 56 different scores and they can help build your score based on what you need
Now sometimes these coaches are paid for separately then the monitoring service
Sometimes there's some they're included they kind of come together now
I like watch my score calm because you get free coaching with it through this credit nurse and Eric counts on his team
But again, you find a place that works best for you, but you need that coaching and training
places that are gonna teach you what type of cards to get and not to get and
Type of loans are good ideas and bad ideas
So that's why I like the coaching in the training a part of these seven steps
Now we get on to these other four steps of how to build your credit and more specifically build a good credit report
Because remember your score is going to change but you want a quality credit report
Now I'm gonna get to the why at the very end of this in a moment
But let's hit these four number four secured credit card
You're gonna hear a lot about this out on the web
and
basically
It's where you put maybe five hundred dollars with a bank and then they give you a credit card with a five hundred dollar limit
You can't touch the five hundred dollars and the bank feels good about that
And so they give you this credit card with a five hundred dollar limit now, that's good
It's gonna report to your credit reports and your credit score will be affected
But it also puts you in a weird world in a bad way. You're now in this five hundred dollar credit limit world
Maybe you want a twenty thousand dollar credit limit someday. Is this gonna help you get there?
Because when someone looks at you
They're gonna see you as kind of a $500 borrower not a bigger borrower so it can have some detrimental effects
So in summary, you want to talk to your coach and go mmm
I get a secured credit card or not
and you're gonna talk about your goals with credit and
The coach is going to help you decide on which secured credit card if at all is good for you number five secured loan
very similar to a credit card
But it's gonna help you build credit without putting you in that five hundred dollar world of a credit card
you're gonna basically put money in a CD a
Certificate of deposit with a bank like a five hundred dollars or a thousand and then you're gonna borrow against it and make loan payments
Now that's gonna affect your credit score and a good way and it's gonna report to your credit report
But it's not gonna put you in this five hundred dollar secured credit card world
So it's another way of looking at it and going about building credit and it could be a good choice for you
Talk to your coach number six become an authorized user on someone else's credit
And this is the fastest way to build a good credit score and get some good reporting on your credit report
But what I'm not talking about is having someone co-sign on your application for credit
That's very different because you still might have that these credit card limit issues
What you're doing is getting a credit card on someone else's credit
That's had it for a long time has a high limit and it's almost like they're coaching you and teaching you
responsible credit usage by getting on their credit
That's becoming an authorized user in a great way to build credit now number seven
Show responsible use of that credit and this really starts to build up on the why which is the summary of this little video
Show responsible use now what this means is
Credit cards, that's right. I'm doing what Dave Ramsey told you not to do get credit cards now
Are you gonna go out and max these out? No, are you going to go out and use them for dumb purchases? Absolutely
Not the credit card is a necessary evil to build credit
We're not gonna use the credit cards and we're not gonna max them out
We're just gonna have those two or three credit cards
To maybe build some points which isn't a whole other strategy for those that are really really responsible with credit
Topic for another video of mine but we're gonna be using those credit cards once in a while
Common industry use says about every three months use the credit card for a small purchase and pay it off immediately
I don't want you paying a lot of interest pay that thing off right away. See again, Dave Ramsey
We don't want to pay a lot of interest
We don't want to use credit cards ever, but we've got to have a credit score
We've got to have a credit history and a good credit report. So number seven is
using the cards
Responsibly because that's what you're telling lenders. I've got credit. I've got credit cards, but I don't use them
I keep them in a drawer and I just use them once in a while. What have you done?
You've shown lenders that you're responsible. What's your credit score gonna do?
Climb up. That's the point. Now the why now, why does all this matter it matters?
Because I see things I'm a CPA attorney
Like I said earlier and our firm helps clients around the country and we do
Consultations every day and I myself doing three a day. I'm gonna meet with a thousand clients during the year
Do you think I see patterns? You think I seen patterns of success and when clients ask me mark, what are successful people doing well
Successful people are using credit wisely and carefully to build wealth and passive cash flow
now when I use the word wealth
I get it a Dave Ramsey definition of wealth would be completely out of debt even with your home paid off
You've got your retirement plan
You're putting some money in and it's going into Wall Street, and you're getting a decent rate of return
You have Social Security and maybe a retirement at work cool that that is a great definition of wealth
But are you gonna get the style or the quality of life that you want?
is it going to be enough income for what your dreams might be and
is that a moderate style of living versus something you dreamed up to do more with charity and and
philanthropy more money
I don't know because I have other clients that define wealth as being out a credit card debt and having passive income and
Contributing to their timer counts, but they might have a little mortgage on their home with a very low interest rate
They might have debt on rental property or a line with credit inside their businesses. They're growing their business
So that's what I see. I'm not a credit expert
But I am a small business
Expert to some degree as I help consult clients on these tax and legal and business matters
So in summary if you're trying to build wealth
credit
your credit score and credit should be an
Important part of your equation and I need to say thanks again to Erick counts and the guys over at credit nerds
They do a great job and I even call them right before the show
It was like I'm gonna talk to about about credit because I have so many clients using it
You know wisely and badly
What should I remember and what are the facts and so he was so helpful in this so folks
I hope this has been helpful. And as many of you are young and building that credit for the first time. Be careful
Be cautious keep working and don't give up
Thanks so much for watching that video and I want to be your source for tax and legal strategies
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