Over 109 million people need help with credit. Not many people know but 79% of credit reports contain errors. It doesn’t matter if you pay your bills on time and if you were diligent with your bills, there’s still a very high probability of having some error, whether it’s your name, spelling, or date of birth. Eduardo Ramos is a certified credit expert who empowers people to change their credit status from rejection to acceptance. Eduardo talks about the five major principles of helping you maximize your credit and to help you better understand.
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Five Major Principles To Help You Maximize Your Credit with Eduardo Ramos
I want to tell you a little bit about my guest. I had the pleasure of sitting next to him every single day. I also had the pleasure of having dinner with him, chatting with him and breaking bread with him. I’d never felt someone instantaneously who had such a big, warm, loving, gentle and generous heart. As I got to know my guest, I have the honor to call him a brother, I realized how much service he provides to the world. He is truly in every aspect of the word, Heartrepreneur.
His name is Eduardo Ramos. He’s an author, he’s already written four books. He’s a speaker. He’s a trainer, by the way, he’s a phenomenal speaker. Those of you looking for speakers, I highly endorse him. What’s really interesting is he’s a certified credit expert and I’ve been fascinated learning from him. Eduardo empowers people to change their credit status from rejection to acceptance, in 90 days or less on average or he doesn’t get paid. I’ve never heard of that in my life. I want to introduce to you, Eduardo.
Thank you so much for that lovely intro. It was an absolute honor to have you be part of my life and to be part of this show. This is fascinating and we’ve got a very important message to the world because here’s an honest truth. There are over 109 million people who need help with their credit. Some of the people don’t even know it. It’s a pretty scary fact because 79% of credit reports contain errors. It doesn’t matter if you pay your bills on time, or if you were diligent with your bills and everything. There’s still a very high probability of having some error. Whether it’s your name, spelling, or the wrong date of birth. It just goes over a lot of factors. I do want to talk about the five major principles of helping you maximize your credit because a lot of people don’t understand. This is just the basic fundamentals.
The number one thing that helps with maximizing your highest potential credit score, and most people have heard this, it’s paying your bills on time. On your credit scoring or when it’s being calculated, 35% of your credit score is based on payment history. It’s mission critical to make sure that you make your payments on time, even if it’s a minimum payment. A lot of people have this misconception of thinking that, my income tells me how my credit score is. Your income has nothing to do with your credit score. It’s not even part of the equation. A lot of people don’t know this, you could make $1 a year and have a 700 plus credit score or you can make $1 million a year and have the low 700 credit score.
The next important thing is your debt-to-credit ratio and that’s 30% of your credit score. If you put those two together, we’re already looking at 65% of your credit score. One part is the payment history and the other part is how much credit are you owing. I’m going to put simple numbers. Let’s say somebody has a $1,000 line of credit, on any credit card. They’re maxed out $1,000 and they’re not paying that down quickly enough. What’s going to happen is that it’s going to lower their credit rating. It’s considered high risk according to the lender’s eyes and according to their credit scoring model. The best thing to do to help maximize your credit score and this will be an immediate impact, is to lower their balances to below 50% of what they owe.
If you can keep it below 10%, even better. In the case of $1,000 limit, if you keep $100 revolving balance on a monthly basis, it’s going to give you the maximum potential score you can get. I’m glad I’m sharing this because a lot of people have this misconception of, “I pay my balances every month, so that’s helping my score.” That’s actually false. Having zero balance is not going to maximize your credit. In fact, that would look like a cash advance. You want to keep something revolving because it shows the person is responsible with their credit and their managing credit. They’re not overextending themselves and paying the bills on time and that’s what credit limit increase has come in and all that good stuff. That’s one of my little secrets, requesting your credit limit increase or offset your debt-to-credit ratio. Most people don’t even know that.
Now the next important part is a huge one, although it’s a small percentage, it’s a big impact. It’s called the average age of file. It’s how long have you had credit. You can’t get to an 800-credit score or really high 700’s if you’ve only had credit for a year or two. There are programs out there to tell you, “Trash your credit cards, close your accounts out.” That’s going to have a significant impact on the history that you’ve had credit and also, it’s going to damage your debt-to-credit ratio. The reason why is because 15% is your average age on file. The longer you have credit, the better it is. If you close those accounts out, you start to reduce how long you’ve had credit. It starts to make a big impact because then it looks like too many recent new accounts versus older accounts.
Moving to the next one is actually a pretty simple one, it’s 10% is the next part of the equation. It’s your mix of credit. Let’s say you have a mortgage, you have an installment loan, maybe it’s a student loan, you have several credit cards, auto loans, things of that nature. That equates to 10%. A lot of people think, “I need to pay down those balances right away.” That’s not the one that’s impacting your score the most. It’s your revolving lines of credits, your credit cards, your store cards, those are the ones that impact your score the most. Owing too much on it, will impact it. The final one, which is a very simple one too, is how many inquiries are you putting onto your credit file? If you’re going out there and trying to search for a lot of credit, it’s not looked at as a good thing. It looks like you may potentially be looking into getting into trouble. That’s only 10%.The number one thing that helps maximize your highest potential credit score is paying your bills on time. Click To Tweet
Let me clear out a big question. It’s one of my frequently asked questions when I’m mentoring people what their credit is. I’m going out for a mortgage loan, doesn’t the bank hit my credit? Yes, they will. The nice thing about the latest laws is that if you’re going to go shopping for an auto loan or mortgage, you have a 45-day window to shop around. The increase is only going to impact you within that one 45-day window or it’s not going to be a hit for each inquiry. In the past it was only 14 days and if you went back, it would hit you again as a hard inquiry. Those are the basic fundamentals of understanding how to maximize your credit score.
I thought I understood credit score pretty much. I definitely didn’t understand what percentage gets impacted a lot of the nuances that you shared. Let’s just say somebody applies for an account at a chain store at Macy’s or something. After that they go to another store and they apply for another card. They just do a bunch of that because every time they shop they tell them you can get 10% off or whatever it is. They’re trying to get all these credit cards from stores. Does that affect them?
It has its pros and cons. Too many recent open accounts could actually impact the credit score negatively because it’s looking like they might be trying to overextend. The credit system doesn’t know what you’re doing, but it’s guessing as to how likely are you going to be 90 days late. That’s where the credit scoring model comes in. If you decide to take advantage of those special offers, which I’ve done many times as well, I’ve done it for the guitars. I take the zero-interest option and pay it off, but I’d never close the account. That’s where the mistake comes in. The available line of credit will no longer offset your debt-to-credit ratio.
How can people get in touch with you? I know you’ve written a tremendous amount of really helpful books. How can they get your mentoring? How do they connect with you Eduardo?
We’re updating the website with some really fascinating technical and tactical training online. People are going to love it. The best thing is email, EduardoRamosNow@Gmail.com. That will get sent directly to me or to one of my staff members.
In this little segment of our radio time, you have given so much value. I’ve been doing radio interviews for several years and I’m being from the heart as transparent as I can be, this is one of the best interviews. I’ve got so much value. Where can they get your books?
If you email me and you told me that it’s coming from the Terri’s show, I’ll email those books to the person that requested it will be a free download. My way of passing it forward. It will be for a very limited time because I do have a partner involved. We’re making different decisions along the way, but we will offer this as free, temporarily.
To the listeners, you can see why I tell you he’s a Heartrepreneur. I also highly endorse him for his skills, for his knowledge, for his gifts and for his generosity. I cannot begin to thank you enough for being here. You always create massive amounts of value and you’ve done it once again.
Thank you for everything you do and thank you for being a true Heartrepreneur.
Thank you. For the listeners, make sure that you connect to the show and subscribe to every episode over on iTunes or Stitcher or wherever you may be. You can subscribe in that way you never miss an episode. We love passing it forward. Pass our show forward. Tell your friends, your family, your clients, your patients and your customers about the kind of value that we create here. Share us on social media and share us around. Don’t forget to tune in next time, we’ll have another wonderful guest who will help you create more business and life success. Thank you for tuning in here at Heartrepreneur Radio.