Tulsa Mortgage : Podcast 42 – Part 1
Tulsa Mortgage Steve: This is stevecurrington.com and the Steve & Tyler Show episode number 42.
Speaker 2: Welcome to the Steve and Tyler Show with stevecurrington.com and Tyler Wilburn.
Steve: Who negotiated the contract for you?
Tyler: A realtor.
Steve: Oh, you are pretty smart. Good for you men.
Speaker 2: They’re talking about everything you need to know about mortgages, home loans and more. Nobody knows mortgages like these two. Get ready because here’s Steve and Tyler.
Steve: What’s up Tyler?
Steve: Guys, I just want everybody to know that as we start this podcast Tyler is doing his nails in the studio.
Steve: We’re trying to talk about what makes up a card score and I think Tyler literally, If I wasn’t here, he might have like a little buffering nail polish.
Tyler: Probably. I need a cuticle pusher.
Steve: A thing to note that when you’re doing a podcast and it’s not on video, then your podcaster could be getting a full manicure or giving themselves a full manicure while they’re doing the podcast. Just know that that’s happening in the background. Today we’re talking about Tulsa mortgage loans, right Tyler?
Tyler: Oh yes.
Steve: Stevecurrington.com here. We’re talking about what makes up a credit score. We talked about, in previous podcast, really focused on our revolving credit, right Tyler?
Tulsa Mortgage Steve: Anybody can Google this and we should do this just as an exercise. I’m going to go to Google while we’re live here on the show and just look up what makes up a credit score just so you guys. So guys, what makes a credit score? You get the FICO, myfico.com; there’s lots of different websites but basically, there’s a — Oh, this is a good article. This is a good article, let’s look at this one.
FICO’s five factors; this is like a website called credit cards.com. This is somebody that’s written this. That’s maybe like a Steve or Tyler who calls himself an expert, so I’ll just preface it with that but we’ll look at it and we’ll see if their information is valid and it is looking pretty good. Here we go.
35% of your total credit score is based on your payment history; making the repayment of past debt is the most important factor in calculating the credit score according to FICO. Past long term behavior is also something they use and then credit evaluation which we talked on in the previous podcast of how you use your revolving credit represent about 30% of your score and so if you don’t have any revolving credit, you don’t have 30% of your score.
The link of your credit history is another one that represents 15% of your score. A lot of people think that, “Tyler, I’ve got credit for 30 years and that one like payment must quote it.” No one cares that you’ve good credit for 30 years. What they care about is what you’ve done in the last 24 months, and it’s only 15%. Literally, think about that. “I’m brand new, I’m 19 years old, and I’m establishing my credit. I have a new account opened and I don’t have a lot of credit history, I just don’t.” 15%, who cares? You have 85% of your score to build. You want to know that.
Four and Five is new credit and a credit mix, and each of them represents 10% of your total score. Does that equal to 100%? You’ve got 20; you’ve got 15, that’s 35. Then you’ve got another 35, which takes you to 70 and you get 30 which takes you to 100. So you’ve got revolving credit representing 30% of your score, you’ve got your payment history making payments on accounts, and then you’ve got the mixed up credit and opening up new credit.
A lot of people will say, this is my favorite thing, to note here. Maybe I should say this is the most annoying thing that I hear. “Well Steve, I have this car loan and I just paid it off, so I know that will help my score. I mean my score should go up.” I’m not trying to be rude but I just want to go, “What?” Like why do you think that’s going to help your score? You paid it off, now it’s part of your credit history. We just said like new credit, linked of credit history, 10% for new credit and credit mix and link to history is 15%.
Tulsa Mortgage Now you took an account that you have a good payment history on that might be representing 35% of your score and you moved it into — it’s a closed account, now it’s part of my credit history. So what makes you — oh here’s one. “Well, that I had that account on, it was a 48-month loan but I paid it off earlier. I paid it off in like 30 months. I know that’s going to help my credit.” No.
Steve: No. No. No. You know why? Because you get rewarded by the credit bureaus and by the creditors who by the way fund the credit bureaus, that’s how they’re there, by making payments. And guess what; do the math here. The more credit makes you have, the more types of credit you have, the more interest you pay. Maybe that’s the conspiracy theory; the more interest you pay, the more likely you are to have a higher credit score.
I have multiple accounts that I’m managing, monthly I’m paying, I’m paying interest on, then I have a good credit score. If someone tells you to go pay off an account and that’s going to help your credit score, take the nearest item that you can get your hands on and smack them with it because they are not correct.
Here’s the other one, “I have a collection account Tyler. It’s –” Let me just back up. I wish I could talk to people before they call me, like I wish I could get into their head and say, like be that voice like you’re the devil and you have the — you know the angel is on your shoulder? I want to be like the angel on their shoulder that says, “Don’t do that. Call Steve, call Steve.” Because if you can just call me first before you go do stupid things, not stupid things, uninformed things I should say Tulsa Mortgage .
Here’s another thing happens every single day. Every single day this happens. “Hey, I wanted to see if I can get qualified for a home loan, I saw your really cool add for Tulsa Mortgage on Google or on Facebook, and I really love your little collateral thing. It’s so cool. You guys are funny. I watched your videos that are on your Facebook and I watched the videos that are on your website, they’re really cool but hey, I just paid off all my bad debt and I’m ready to buy a house.”
Just like that too and on the other end of the phone there’s me, literally, this is me hitting my head on my desk.
Tulsa Mortgage Steve: And I’m like, “No, please don’t tell me you just went and paid off all your bad debt.” Because here’s the thing; I tell people this all the time. If you have a moral obligation to pay something, like, “Hey, I owe this”, like, “I tried to stood up, it’s my debt.” Whatever it is and you feel like, I need to pay it. Then pay it, by all means. But if you’re paying it because you think it’s going to help your credit score, don’t pay it. If they’re suing you, if you’re getting your judgment, if they’re [unintelligible 00:08:05] check, pay it.
If you’re paying it because you’re thinking, “Oh, I’m going to pay off all my bad debts and it’s going to raise my credit score.” You’re wrong. In fact, it’s weird, it’s really weird, but some people will have collection accounts with balances and they’ll have a decent score. Like if they don’t have any open accounts, and they don’t have any collections, their score ticks. I don’t know how you get all six or four credit score and all you have is a collection of accounts, right Tyler?