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  • Writer's pictureMia Denean

How To Build Your Credit 101💳✨

Updated: Oct 26, 2022




Hi, Beauties! Thank you to everyone that has taken an interest in the Stacking Your Coins 101 blog post; I appreciate you taking the time out of your day to give it a read, and hopefully, not only are you enjoying it, but I hope you have been able to take some of those tips and methods with you to apply them to your daily life.

If you are on the journey of evolving your relationship with money, we must get into credit building as they go hand in hand. Not only are we striving for abundant finances and preserving our money, but we are also striving for excellent credit. In this blog post, I will give you some tips and advice on building your credit, whether you are new to establishing personal credit or trying to raise your credit score from where it is. I hope you enjoy this post, and I hope that you can take at least one piece of information from this and apply it to yourself.


What is a Credit Score?


A personal credit score is a number between 300-850 established by three credit bureaus: Equifax, Experian, and TransUnion. This number is used to help lenders decide how fit or unfit you are to receive school, car, personal loans, credit cards, and mortgages. Any person with a social security # in the United States will be subject to a credit score. This is not something that you can opt-out of or sign up for because any lending application that asks for your SS # will be reported to the credit because.

Why is a Credit Score important?

Establishing good credit for yourself and paying attention to your credit score is essential because this score will follow you throughout your life and as life goes on. You decide that you want to apply for a mortgage to buy a home or buy a car; this credit score is going to be a significant factor in whether or not you get approved or denied for these loans and the interest that you are going to have to pay on them which all depends on your credit score.

Example: Person A has a credit score of 525 while Person B has a credit score of 750; they both go into the same car dealership and fill out an application for the same car with the same starting price point. Person B is going to a much lower APR rate than Person A because to the lender, on paper, Person B is more responsible and adequate when it comes to paying their loans, so they trust that they will make their money back from this person, so they grant them a lower interest rate on the car. The difference between these credit scores can cost thousands of dollars on interest alone, which does not contribute to the principal loan equating to you paying more money over a more extended period.

Some people go through life saying they'll pay cash for everything or swear that they will never use credit cards, but this may not be the wisest decision because your credit score can still get run in some situations, and with the way the World is heading towards more use of contactless and cashless payments.

How to view your Credit Score

Viewing your credit score can be pretty simple by downloading the Credit Karma app. Credit Karma is a free app that allows you to view your credit health from different bureaus, where you can also view your reports and what the lenders see. I like Credit Karma because they will also give suggestions on credit cards you can apply for in your range that will help you build your credit and suggestions for other loans.

Please be mindful that Credit Karma may not always be up to date or 100% accurate, so it is also best to sign up for Equifax, Experian, and TransUnion, as they have free sites to view your credit reports as well. They may offer different plans for which you have to pay monthly, but you can decline those and still have access to your information.

When I was overspending on my credit cards, at one point, I would shy away from wanting to view my credit score because I was afraid of what I was going to see, almost like the fear of the unknown. Still, I had to teach myself and relay to others that we cannot continue to avoid these things when they arise because that can lead to the situation getting worse than it needs to be by purposefully not viewing your credit score or bank accounts when you feel like you've been spending too much money you are only doing a disservice to yourself. After all, coming face to face with those situations and learning how to handle them is the best thing you can do for yourself and your finances.


What makes up a Credit Score

When I turned 18 and decided that it was time to pay attention to my Credit Score, I first wondered how they came up with a score if I had never had a credit card or any credit history. Well, that school loan that I applied for was the first thing to show up on my credit score, which helped to establish my Credit History, but this may not be the case for everyone, so this is how a Credit Score is established.



Two top-scoring top-scoring services are commonly used: FICO and Vantage. These scores are then submitted to the credit bureaus, which is how you get a credit score. These numbers are calculated based on the FICO Model 8, which all three credit bureaus use.

payment history (35%),

amounts owed (30%),

length of Credit history (15%),

new credit (10%)

Credit mix (10%).



If you ever see that your credit score may be slightly different for each bureau, do not be too worried, do not worry because they are taking other things into account when it comes to cultivating your credit score. Besides Credit Karma, the Experian website is another excellent tool for getting a full in-depth credit history report. You can pay for this service which is $20 a month, but it does come with many benefits; I currently use this in conjunction with Credit Karma and personally prefer Experian because it is more accurate and provides way more information and tips for not only building credit but obtaining loans and mortgages.



Now that we are all on the same page and understand what a Credit Score is and why it is essential, It is time to dive into how you can build and maintain your credit to reach that 850 credit score!


Building Credit

If you are looking to build your credit but are not yet ready for a credit card, I would first check out the Self app. This is a great way to make credit while saving money you will get back at the end of your loan term.



The Self app is a savings app that reports to all three credit bureaus. How it works is you set up a loan amount broken down into 12 monthly payments. For example, you decide that you want to save $400 for twelve months. Self will then break that down into monthly payments equaling about $33 a month. Each time you pay that on time it gets reported to the credit bureaus, which will help to build your credit score over time, and the best part is that you get your money back at the end of the year! Not only are you saving money that can be used at your leisure once the $400 has been paid off you are also building your credit!

Self is excellent because it allows you to see the change in your credit score over time. I would recommend this to anyone; whether you have a bad credit history for years or are new to establishing, this is a straightforward and helpful way to tackle two goals. If your goal is to save a certain amount of money by the end of the year and build your credit score, your Self is there to do just that.

Use my referral link when signing up

Credit Cards

The stress of having Credit Cards and Credit Debt is probably a subject that many individuals over the age of eighteen in America can relate to. About 14 million Americans have at least $10,000 worth of credit card debt, and studies have shown that at least 54% of people carry credit card balances each month. Managing credit cards, debt, and how it can affect us mentally and emotionally is a topic that I wish was discussed publicly in schools and at a younger age. Still, unfortunately, everyone has not been educated the same way on this topic.

Now, as I have gotten older and tackled my minor credit debt, changed my relationship with money, and stayed on track with my finances, I find that credit cards can indeed be a blessing with many rewards, only if you can adequately handle your spending habits and don't view credit cards as an "I don't have the money now, but I'll pay it back later" option.

If you are new to establishing credit, I recommend starting with a Secured Credit Card. A secured credit card is a low-risk card that usually does not have annual fees or rewards associated with them but is great for building credit. How it works is that to get the card, you have to open an account and deposit the amount desired into the fund, which will then be available for credit. For example, my first credit card was a secured credit card that my dad put $300 into when I was eighteen, connected to my local credit union. If you do not pay the secure credit card on time, we will take this money out of the account where you initially deposited the cash. Still, you always want to spend your credit cards not only on time but slightly earlier, as this will help to boost your score when the bureaus see that you are paying these back early; that's a good look.

As you move up through the credit card ladder, you will get offers in the mail and email, and if you have Credit Karma or Experian, they can also match you with cards that fit your criteria. When you continue to pay your balance on time, you will also be eligible for a credit limit increase which is great because the more your credit limits go up, the lower your credit utilization will go down, but only if you are not abusing your card.

Tips for Credit Card Holders

✨Always keep your credit utilization under 30%

✨Realistically would recommend keeping your credit utilization at 10%, which gives you another 10% of cushion to use and another 10% in emergencies, and you must use your credit card.

✨Try not to apply for too many credit cards or loans at once, as this will drive up your inquiries, affecting your score and making you look desperate to credit lenders.

✨Have a card that you can use for your daily expenses because you know that you always have the cash for that (i.e., gas and groceries)

✨Look into your credit card rewards program. Many credit cards come with great rewards such as cash back, travel points, gas points, discounts at retailers, and so on. Find a card that has what you are looking for. If you are a person that likes to dine out frequently, a card offers cash back at restaurants or points for your purchases. These will accumulate over time, saving you so much money.

✨Use your cash back to pay down your balances.

✨Do not carry a monthly balance. If you can, always try to pay your card in total to keep your credit utilization low and interest-free payments. Always pay the minimum amount if you cannot pay the total amount due.

✨Late payments, collections, and bankruptcies show up on your credit report as a derogatory mark appears on your credit report as a derogatory mark. One late payment can stay on your credit report for approximately 7seven years. Does this suck? Absolutely. Seven years is a very long time for something to continue to show on your account, even if it was a one-time mistake. I would not want that to happen to anyone, so please be mindful to remember your payment date.

✨Pay your credit card before the reporting date rather than the statement date to help keep your interest and credit utilization low. This date can be different for each account; I suggest researching or contacting customer service to find out when the reporting date is.

Becoming an Authorized User

Another helpful way to build your credit is by becoming an authorized user of someone else's credit cards. If you have a family member or someone you are close enough to who is willing and able to help you establish that, then go for it. Being an authorized user can help boost your score because those cards you are added to will show up on your credit report without the risk of a hard inquiry being pulled. As long as the account is in good standing and you know that this person is consistently responsible with their credit, this will only benefit you. You can ask to be removed as a user if you no longer feel like you need assistance.

Tips For Tackling Deb

Here are some articles for helpful tips on tackling debt

How To Get Out of Debt in Five Simple Steps by Taylor Milam-Samuel

27 Ways To Get Out Of Debt by Ramsey Solutions

How These Savvy Black Women Overcame Student Loan Debt by Lee Anna A. Jackson

This is a list of content creators I enjoy watching for advice and tips for finances, credit, investing, and business. If you have spare time, check these fantastic ladies out!

Life with JazzyMac

Noelle Randall

Launch to Wealth

Clever Girl Finance

The Upgrade

Mindset

It always comes back to mindset. Even though I have not reached millionaire status yet physically, I carry the mindset that I am already a millionaire in spirit and not just a millionaire but one that has an abundant mindset, success, and happiness. I walk in confidence and faith, affirming daily to the universe that I will be a millionaire. Once I reach that, I will only continue to grow my wealth and knowledge, hoping to spread the information I learn with others so that they can see that the life they want for themselves is attainable if they put in the work and time to get there. We could have the conversation oh High Value vs. High Earning, but we'll hold that off for another day.

atomic habits book by James clear




Atomic Habits by James Clear





I hope you have found this blog post helpful, and if not beneficial to you, then someone close to you may find this information valuable. Keep striving to become THAT version of yourself, Keep affirming it to yourself and never give up on yourself, it is not always an easy journey, but the best thing we can do for ourselves is to be present in the moment and enjoy becoming. I truly am appreciative of you all and hope you enjoy the rest of your week 🤎✨


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Do you need a bit more Self-Care in your life? Download your free copy of the 30-Day Self-Care Challenge and begin transforming your life TODAY!







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