Updated: Sep 21, 2019
Chayo, you are known as the Credit King, in your experience, what is the number one reason people experience credit difficulties?
Your credit score is important. It determines how much credit lenders are willing to grant. Knowledge of the causes of a poor rating can help you to avoid pitfalls that can take years to correct. A bad credit score is caused by several key elements, but the main reason is your willingness to pay the bills in a timely fashion. Listed below is a pie chart for the breakdown on percentages of your credit rating.
1. Payment HistoryYour payment history comprises 35 percent of the total credit score and the most important factor in calculating credit scores. According to FICO, past long-term behavior is used to forecast future long-term behavior. One of the best ways for borrowers to improve their credit score as a whole is by making consistent, timely payments.
You have helped many people improve their credit scores. What are your three top recommendations for those seeking to improve their credit?
Over the last seventeen years, I have focused on teaching people the pathway to understanding a good credit rating. As a Real Estate Investor, myself I know the importance of having a good credit report. I teach clients, “Your Credit Defines Your Creditability and the pathway to achieving a good credit rating.”
I know such issues are daunting, but you may need to borrow funds from a lender. Therefore, a good credit score will make the process easier. Your credit score determines two things that can affect your loan approval. First, lending money entails risk; lenders need to know you are reliable. Second, your credit score determines the terms of your loan. Payment History - The whole point of a credit score is to inform a lender of whether you’re a reliable borrower. Being a reliable borrower is making on-time payments. Lenders want to see good payment history; it’s their only way to verify your creditability — whether on-time payments have been consistently made on things like credit cards, retail accounts, and loans
How much you owe - Keep balances low on credit cards and other “revolving accounts.” High outstanding debt can affect a score. Pay off debt rather than moving it around. The most effective way to improve your score in this area is by paying down your revolving (credit cards) debt.
Length of History - It’s impossible for a person who is new to credit to have a perfect credit score, but it doesn’t necessarily take long to achieve a high score. A longer credit history provides more information and offers a better picture of long-term financial behavior. Therefore, to improve their credit scores, individuals without a credit history should begin using credit, and those with credit should maintain long-standing accounts.
You have written a new book Your Credit Defines Your Credibility, what was your motivation for writing it and how long did it take you?
The basics concepts of credit stability are simple, but most people look at these topics like taboo, when in fact they are essential to becoming successful. In today’s society, having just an average credit rating may not be enough. Employers are beginning to check credit history to make sure an employee is a good fit. Think of your credit score as a resume, your life history. It paints a clear example of what type of person you are in real life. I have over seventeen years’ experience in real estate entrepreneurism and life coaching. One of the first topics discussed is a client’s credit rating because it will determine your next course of action. Something as simple as getting a place to live requires a credit history report. Therefore, I am committed to assisting people in understanding the importance of credit credibility.
Completing Credit Credibility is not a complicated book, but required effort due to the fact, most information available to consumers, is vague and non-explanatory. The material lists all types of statistics or general gobbledygook but never specifies details on the action necessary to define your credit. I would say it took me a few months writing and then verify the data.
What are the outcomes readers can expect from Your Credit Defines Your Credibility?
The book gives clear examples of what to do and not do when it comes to defining your credit credibility. Education is the key to any successful person or business, but people must be willing to learn. I wanted this information to be distinct and well-defined, permeators on the actions necessary to understand credit.
Many jobs, insurance companies, etc. are now conducting credit reviews before considering you as an employee or before quoting rates for insurance. How does this phenomenon correlate to your books premise that your credit defines your credibility?
Employers sometimes check credit to get insight into a potential hire, including signs of financial distress that might indicate risk of theft or fraud. They don’t actually get your credit score but instead see a modified version of your credit report. An applicant’s credit history can flag potential problems an employer would want to avoid. For example, lots of late payments could indicate you’re not very organized and responsible or don’t live up to agreements. Using lots of available credit or having excessive debt are markers of financial distress, which may be viewed as increasing the likelihood of theft or fraud. Any evidence of mishandling your finances could indicate a poor fit for a job that involves being responsible for company money or consumer information.
The National Association of Professional Background Screeners worked with HR on a nationwide survey of 1,528 human resources professionals about screening checks. The results showed 25% of the HR professionals use credit or financial checks while hiring for some positions, while 6% check the credit of all applicants.
While having a credit check as part of your job application may feel like a tension-filled cherry on top of your stress-soaked sundae, it’s not all doom and gloom.
The other bright side is that you aren’t helpless in this equation. If you’re planning on entering the job hunt, enroll in credit monitoring to ensure that no unexpected changes slip by and look over your credit report to make sure you have a handle on what’s being reported. Just like every other aspect of the application process, make sure you come in prepared, anticipate any possible problems before they happen and reap the rewards of your financial responsibility.