- I'm gonna get a little wild in this one,
so strap yourself in for what Uncle Jarrad
is gonna teach ya.
I recently signed up for the Apple credit card,
and to my surprise they told me
that my credit score is 816.
Mark my words, once it hits 850
I'm using that sucker to pick up women.
I can see it now, "Oh my gosh, Jerrad.
"Can you take me out on a date?
"You have an 850 credit score,
"I love that."
Let's be honest, it's probably
not gonna help my cause.
But I was like woo freaking hoo.
I was actually pretty happy about that 816.
No it's not a perfect score, I know.
Make fun of me in the comments.
But it is good enough to unlock
some sweet life features that will make
growing my net worth just a little bit easier,
and a whole heck of a lot cheaper.
This got me thinking though,
about the things that I've done over the years
to achieve that excellent credit score.
Now, I want you to join this 800 club with me,
so in this video I'm gonna give you
the five habits that you need in your life
to achieve and maintain an excellent credit score
in six months or less.
Just a heads up, if your current credit score is trash,
like really bad, then it might take you
a little bit longer to get in the 800s.
But for the average person,
this is achievable in six months.
Keep in mind that just because
you have an excellent credit score
or a very good credit score right now,
doesn't mean you can't lose it, so pay attention.
Hey I'm Jarrad with an A, and on this channel
we like to talk about all things
personal finance and investing.
And we also try to have a little bit of fun as well.
The first habit is to use a credit card,
for everything.
I'm gonna take the opposite approach to Dave Ramsey,
and tell you to cut up all of your debit cards.
Stop using 'em.
Just kidding folks, settle down.
I actually like Dave, but seriously don't cut those
debit cards up, because you might need to use them
at an ATM to get some cash out
if somewhere you're going doesn't take credit.
But seriously, stop using a debit card.
You should always default to using a credit card.
Using a credit card isn't inherently bad.
Look at it like a tool that responsible adults use
to enhance their financial life.
Just like, we'll say a hammer, you can use it
to either build a house or, of course
hit yourself over the head.
Now if you follow the rest of these habits
that I give you, then you will not be hitting
yourself over the head when you use a credit card.
And your credit score is gonna increase.
If you have multiple credit cards,
then make sure to charge at least
a little bit of money on it
every single month to keep the card active.
Now, it can honestly be anything, like a dollar.
As low as a dollar.
So go buy some vegetables, a head of lettuce,
cucumbers, or anything like that will be good enough.
Plus, you'll be eating a little bit healthier,
which will probably help you live
just a little bit longer, so you can enjoy
that excellent credit score for just a few more years.
Quick pro-tip, I've actually heard
from multiple people how keeping
every open credit card active every month
is a little hack that you can use
to quickly increase your credit score.
I personally do this anyway,
so I've never really measured it to see
how quickly my score went up.
But I just wanted to throw it out there for you,
just in case.
If you haven't done it already,
please Hulk smash that thumbs up button.
The next good habit to get into
for an excellent credit score,
is to be aware of your credit utilization.
Your credit utilization is basically how much
of your available credit you're actually using.
If you have two credit cards
that have limits of $5,000 each,
then your total available credit is $10,000.
If you charge $1,500 on one card
and 1,500 on the other, then your credit utilization
would be 30% because you've charged $3,000
of your total $10,000 limit.
Now this doesn't mean to carry this balance
from month to month and pay the interest on it.
That is not smart and doesn't increase
your credit score at all.
I know some people say it is, but its not.
But if you have that $10,000 limit,
and you currently have $3,000 charged,
then I wouldn't charge any more money on your card
until you've paid some of that off.
I would say that a good credit utilization number
to shoot for is about 20%.
You'd be fine with 30%, but do not go over that 30%.
Anything above that 30% I call the dream crushing zone.
If you plan on applying for a mortgage soon
then you need to keep that down to 20%, or even below.
I would say a good sweet spot would be about 10%.
When you use more than 30% of your total available credit,
you become a riskier borrower in the eyes of the banks.
You've gotta remember that when you have a balance
on your credit card, even if you have the money
to pay for it, that is considered unsecured debt,
which means it's debt that's not backed by any assets.
Secured debt though, is debt that's backed by collateral,
like a loan on a car or a mortgage on a house.
One of the reasons these have lower interest rates,
is because the banks know that if you don't pay them,
then they can take that physical asset and resell it
to at least cover some of their loss.
With a credit card you're not swapping
a physical asset for their money that you use.
They're essentially letting you use their money,
and taking your word for it that you'll pay them back.
Which is another reason they charge extremely high interest.
The two obvious ways to keep
your credit utilization in check, is by either charging less
or increasing your lines of credit.
To increase your lines of credit you can either
call your current credit card companies
and ask them to increase your available credit,
or apply for another credit card.
Let me know down in the comments below
what your credit score is, and any habits that you have
to help increase your credit score that might help
the rest of us, that I don't mention in this video.
For the record, as long as your score
is above 800, then that's good enough.
And 850 gives you the exact same benefits
as an 800, so once you join that 800 club
then just stay there.
You actually may want to get a little bit above an 800,
so that your score can take just a small hit
if you apply for different credit cards
or a mortgage in the future.
Don't be afraid of the credit score reduction
from opening a new credit card.
You'll be able to make up for that loss pretty quickly.
Just don't go applying for new cards every single month.
Another habit you need to get into
is paying your bill on time, in full.
Now we're all adults here, so there should be no excuse
to miss a payment.
Especially if you use one of the habits
that I'm gonna mention in a minute.
Set up auto payments, or even set a reminder on your phone
to log in and pay out the current balance twice a month.
If you're that worried about your credit utilization
getting too high when the credit card company
reports your balance to the reporting agencies,
then make it easier for yourself
and just make two extra payments
every single month instead of one.
Some people will claim they know this,
but no one really knows when these banks
report to reporting agencies.
So you might be better off making multiple
payments per month just to be safe.
Keep in mind that those missed payments
are like a big ugly tattoo that you get on your face.
You'll end up looking like, I don't know,
Post Malone by the end of the whole thing
if you keep on letting those suckers rack up.
It turns that pretty little face of yours
into a war zone and makes everyone,
everyone, feel bad for you.
And no one wants to lend money to someone
with a face tattoo, so don't get those bad marks
on your report card.
Even if you do make really good music,
they don't care.
If you wanna be 100% sure that you can pay
your full balance by the end of the month,
then budget your money.
I've been budgeting for at least 10 years,
and I've never not paid my credit card balance
in full at the end of every single month.
It's literally a fool proof plan.
You spend based on the budget you set up
before the month, and you never overspend.
I hear people whining all the time,
and saying "Oh, but the average person
"spends more when they use a credit card.
"Waah."
Well being average sucks, and the average person
is freaking broke.
I strive to be better than average,
and therefore I don't spend more
by using a credit card.
The next, and one of the most important habits,
this played a huge role in getting my credit score
in the 800s, is paying off $82,000 in debt
and staying out of bad debt.
I specify bad debt, because there is such a thing
as good debt and bad debt.
I know as much as some talking heads
will want you to avoid all debt, it's not all bad.
In my opinion, people telling you that
are holding you back.
They're treating you like children,
like you can't be adults.
Well, it's time to grow up and understand
that there are two sides to this debt coin.
Credit card debt though, very bad.
I would even say the worst.
If you have credit card debt, student loans,
car loans or anything like that,
then it's not gonna do your credit score
or your wealth any favors.
You need to get rid of this as soon
as freaking possible, and the only way to get
extra money to put towards your debt
is of course to work.
If you have time after your full time job,
then go get a second job.
If you still have time after that,
then go get a third job.
There is no such thing as free time
for someone like that anymore.
Pretend like your back
is literally against the wall.
Pretend your life literally depends on getting your bad debt
paid off as quickly as possible, because it does.
I bet if I told you that someone close to you
was gonna disappear forever unless you paid off
your bad debt within two years,
then you would find a way to make more money
and pay it off.
You need to live like your back is against the wall.
I worked three jobs, seven days a week,
to get $82,000 paid off in four years.
I would eat, sleep, and breath making money.
The worst is when I see people who have all this debt,
no money, yet they still complain about being in debt.
You have to be willing to work
for that better credit score if you have
mounds of debt.
You can't pretend like you don't have time either,
because most people do.
You have to quit complaining
and just get to work.
Quick break for another dumb thing
I hear people say when it comes to credit cards.
"Um, but you're going into debt by using a credit card,
"even if you pay it off every month
"you're still in debt at some point. "
I see what they're trying to do here,
but that's just not true.
If I always have more than enough cash
in my bank to pay that bill, then technically
I'm never in debt from a credit card.
The only time you are actually in debt with a credit card,
is when you get charged interest
because you didn't pay the bill
like a financially responsible person.
The next habit that you need to get into
to get your credit score in the 800s
is to not pay attention to it.
I don't really check my score
more than twice a year because
there's no reason to at this point.
When I do, i'll use a website like Credit Karma,
or Credit Sesame since it's completely free.
I'll throw some links in the description
if you wanna check your credit score out
with either of those two websites.
I'm all about setting up systems and processes
to make my life just a little bit easier.
And in this case, as long as you have the system
in place, like the things I mentioned before,
up into this point, then your score
will do nothing but increase.
Once you hit a credit score in the 800s,
I want you to stop obsessing about it so much.
Just do the right thing, and your credit score
will take care of the rest.
Don't forget to Hulk smash that thumbs up button.
Make sure to check out the description
of this video, I put together
a bunch of playlists and resources
to help you out with all of your
personal finance and investing needs.
I'll see ya in the next one friends, adios.