TL: Welcome to Heartrepreneur Radio. This is Terri Levine, chief Heartrepreneur and business strategist. And, once again, I am absolutely delighted that you tuned in for another episode here on Heartrepreneur Radio. Now, I want to tell you a little bit about my guest. Several months ago, I had the pleasure of sitting next to him every single day for, I don’t know, 9 days or so. Had the pleasure of having dinner with him and sitting and chatting with him, and breaking bread with him. And, I tell you that I’ve never, and I mean this, I’ve never felt someone instantaneously who had such a big, warm, loving, gentle and generous heart. And as I got to know my guest, and the honor to call him a friend, like a brother, as I got to really know him, I realized how much service he provides to the world. And he is truly, in every aspect of the word Heartrepreneur. His name, and I’m gonna say it a fun way, is Eduardo Ramos! I have to say it that way because of friend of our says it that way! But Eduardo Ramos is an author, he’s already written 4 books, he’s a speaker, he’s a trainer. And by the way, he’s a phenomenal speaker, those of you looking for speakers, I highly endorse him. He’s a trainer, and what’s really interesting, he’s a certified credit expert. And I’ve been fascinated learning from him. And Eduardo empowers people to change their credit status from rejection, to acceptance, listen to this: on 90 days or less on average, or he doesn’t get paid. I can tell you I’ve never heard of that in my life. So, I want to introduce to you my good friend, someone I literally call my brother Eduardo.
ER: Oh Terri, thank you so much for that lovely, lovely intro. Ya, it’s an absolute honor to have you 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 about Terri, here’s the thing: there’s over 109 million people who need help with their credit, some of the people don’t even know it. So, it’s a pretty scary fact because here’s the truth: 70% of credit reports contain errors. And it doesn’t matter if you pay your bills on-time, if you’re diligent with your bills and everything, there’s still a very, very high probability of having some kind of error. Whether it’s your name spelling, whether it’s a wrong date of birth, I mean it just goes over a lot, a lot of factors. I do want to talk about the 5 major principles of helping you maximize your credit, cuz a lot of people don’t understand. This is just the basic fundamentals.
TL: Alright, go into them. I’d love to hear them.
ER: Absolutely. Well, the number one thing that helps with maximizing your highest potential credit score, and most people have heard this, but it’s paying your bills on-time. Well, on your credit scoring when it’s being calculated, 35% of your credit score is based on payment history. It’s critical, it’s mission-critical to make sure that you make your payments on-time even if it’s a minimum payment, just make sure that they’re on-time, cuz that factors in.
ER: A lot of people have this misconception of thinking that, well 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.
ER: Ya, a lot of you oughtta know this Terri, but here’s the funny thing. You could make 1 dollar a year and have a 700 plus credit score, or you can a million dollars a year and have the lowest 700 credit score.
TL: Haha (laughter) ok it’s good to know!
ER: So it has nothing to do with it, (laughter) haha! So, the next important thing is your debt-to-credit ratio, and that’s 30% of your credit score. So now, if you put those two together, we’re already looking at 65% of your credit score. One part is payment history, the other part is how much credit are you owing. So, I’m gonna put simple numbers.
ER: Ok, let’s say somebody has a $1,000 line of credit on any credit care. And, they’re maxed out at $1,000 and they’re not paying that down quickly enough, what’s gonna happen, that’s gonna lower their credit rating. It’s considered high risk according to the lenders eyes and according to the credit scoring model. So, the best thing to do to help maximize your credit score, and this will be an immediate impact, you will see this within 30 days, you’ll see an immediate increase in score, is to lower their balances to below 50% of what they owe. And if you can keep it below 10% it will be even better. So, in the case of a $1,000 limit, if you keep $100 revolving balance on a monthly basis, it’s gonna give you the maximized potential score you can get.
TL: Oh I never knew that. That’s awesome.
ER: Yes, yes. And I’m glad I’m sharing this because a lot of people have this misconception of, oh I pay off my balances every month so that’s helping my score. That’s actually false.
ER: Having zero balance is not gonna maximize your credit, in fact that looks like a cash-advance.
TL: Oh that’s interesting, I never thought about that. Ok.
ER: Ya. So, what you what to do, you want to keep something revolving cuz it shows a person is responsible with their credit. And they’re managing credit, they’re not over-extending themselves. And they’re paying their bill sometime. And that’s where credit-limit increases come in and all that good stuff. Which, we can talk about that a different time, but that’s one of my little secrets is: requesting a credit-limit increase will actually offset your debt-to-credit ratio. And most people don’t even know that, you can do that at least once every 6 months just by picking up the phone and calling the bank. That’s it.
TL: I never knew that, I’m actually writing that down. That’s fascinating. Ok, great.
ER: Yes, yes. Now the next important part is, and this one’s 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 a really high 700’s if you’ve only had credit for a year or two. So, you probably heard programs out there, and I won’t mention those names out there to respect reputations, but there’s programs out there that tell you, hey, slash your credit cards, close your accounts out and all this. Well, that’s gonna have a significant impact on the history that you’ve had credit, and also, it’s going to damage your debt-to-credit ratio in a way. The reason why, cuz 15% is your average age on file. So, the longer you have credit, the better it is. But, if you close those accounts out, you start to reduce how long you’ve had credit.
TL: Ok, that makes sense actually, ya.
ER: Ya. And it starts to make a big impact because then it looks like too many recent new accounts versus older accounts, ok? And then moving to the next one is actually a pretty simple one, it’s 10% is the next part of the equation, it’s you mix of credit. So, for example Terri, let’s say you have a mortgage, you have install loans, maybe it’s a student loan, you have several credit cards, auto loans, things of that nature. That equates to 10%.
ER: So, a lot of people think, oh 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 credit. Your credit cards, your store cards, those are the ones that impact the score the most. Because you know, owing too much on it will obviously impact it. And then the final one, which is a very simple one too, is how many inquiries are you putting on to your credit file? So, if you’re going out there and trying to search for a lot of credit, that’s just not looked at as a good thing. Cuz it looks like you may potentially be looking into getting into trouble, right?
TL: Ahhh, ya.
ER: Ya, so it’s only 10%, but, let me clear up a big question. It’s one of my frequently asked questions when I’m mentoring people with their credit, is: well, I’m going out for a mortgage look, doesn’t the bank hit my credit? Well yes, they will. And the nice thing about the latest laws, and I’m talking about latest laws as the past 10 years, is that if you’re gonna go shopping for an auto loan or mortgage, you have a 45-day window to shop around. And the inquiries are only gonna impact you within that one 45-day window. Or, it’s not gonna be a hit each inquiry.
TL: Oh, ok, ok.
ER: Like it was in the past. In the past it was only 14 days and if you went back it would hit you again as a hard inquiry. So, those are the main components, this is just the basic fundamentals of understanding how to maximize your credit score. You know, cuz a lot of people don’t know this.
TL: You know, I have to tell you, 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, I have a piece of paper here and I wrote some things down. Let me ask you this question: let’s just say somebody applies for an account at a chain store, I don’t know Macy’s or something. And then they go to another store and they apply for another card. And they just do a bunch of that cuz every time they shop, they tell them you can get 10% off if you buy today, or whatever it is. And so, they’re trying to get all these credit cards from stores, does that affect them?
ER: Well it can. It has its pros and cons. Remember, too many recent open accounts can actually impact a credit score negatively. Because again, it’s looking like you’re trying to over-extend.
TL: Yep, ok.
ER: See, the credit system doesn’t know what you’re doing, but it’s kind of, it’s guessing as to how likely are you gonna be 90 days late. So, that’s where the credit scoring model comes in. But, 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. You know I’ve gotten my Guitar Center card, they give me a $4,000 limit, I take the zero-interest option and then pay it off.
TL: Got it.
ER: But, I never close the account, that’s where the mistake comes in. People close the account, now that will actual effect you because now that available line of credit is no longer offsetting your debt-to-credit ratio.
TL: Ok now that makes sense. I had to ask that, this is fascinating. So, 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 can they connect with you Eduardo?
ER: Yes, great question Terri. Actually, right now the best way, cuz we’re updating the website with some really fascinating technical and tactical training on-line, people are gonna love, right now the best thing is e-mail. So, firstname.lastname@example.org. So, that’s e-d-u-a-r-d-o, and then r-a-m-o-s-n-o-w @gmail.com. That will get you directly to me or to one of my staff members, and then we’ll be able to guide you and give you the like once the site is live. We’re actually working really, really hard right now to get this training. There’s over 80 videos going on-line. It’s very fascinating.
TL: Wow, wow. And what I can say here is just in this little segment of our radio time, you have given so much value. I’ve been doing radio interviews for about 20-something years. And I’m being from the heart, as transparent as I can be and as honest as I can be, this is one of the best interviews. I got so much value, the 5 tips that you gave were like I just sat in a whole webinar with you. This has been incredible. Where can they get your books as a matter of fact? I didn’t ask you that.
ER: You actually e-mail me, and you tell me that it’s coming from the Terri show. I will e-mail those books to the person that requests it. It will be a free download, my way of passing it forward.
ER: It will be for very limited time. Cuz I do have partner involved now, so we’re making different decisions along the way. But we will offer this for free, temporarily.
TL: Sure thing. Oh. So, to my listeners, first I have to say you can see why I tell you he’s a Heartrepreneur, right? And I can also highly, highly endorse him for his skills, for his knowledge, for his gifts and for his generosity. So, Eduardo one more time, cuz I want everyone to e-mail you and connect with you.
ER: Yep. It’s email@example.com, and it’s spelled: eduardo ramos now @gmail.com.
TL: I cannot begin to thank you enough for being here. You also create massive amounts of value, and you’ve done it once again. We had a short amount of time, and man, this was jam packed. Thank you so much for being a guest here today.
ER: Love you so much Terri, thank you for everything you do, and thank you for being a true Heartrepreneur.
TL: Oh, thank you. And for the listeners, make sure that you absolutely connect to the show and subscribe to every episode over on iTunes or Stitcher or wherever you may be. You can subscribe, that way you never, ever miss an episode. And we love passing it forward. Eduardo mentioned it, I’ve mentioned it. Pass our show forward, tell your friends, your family, you clients, your patients, you customers about the kind of value that we create here. So, share us on social media and share us around. And 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 again for tuning in here at Heartrepreneur Radio.