Ep. 304 – Improve Your Credit:  Homebuying 101 – Step 3 

Worried that past credit mistakes might keep you from buying a home? David Sidoni breaks down how credit scores actually work for mortgages, sharing practical steps to improve your credit score and explaining why that forgotten $12 water bill from three apartments ago might be more important than you think. He also covers major changes coming in 2025 that could give millions of Americans a fresh start by removing medical debt from credit reports.

Quote

“Time with credit score is everything. The sooner you begin, the better your results. Don’t bury your head in the sand—it’s all fixable.”

Key Highlights

• Could your rental payments actually boost your credit score? Discover how to leverage your biggest monthly payment to improve your creditworthiness
• What if you could “borrow” decades of credit history instantly? Learn about the authorized user “magic trick” that raised the host’s score by 40 points in two weeks
• Is a 760 credit score the same as an 820 for home loans? Understand how mortgage lenders actually view your score in 20-point tiers
• Why are you losing thousands by waiting to check your credit? The truth about hard pulls and why timing is crucial
• Could the 2025 medical debt removal boost your score by 20+ points? New regulations affecting $49 billion in medical debt

Referenced Episodes

• Credit Score Deep Dives: Episodes 3, 8, 56, 61, 64, 90, 199
• PMI Episodes: 198 (“PMI is a Privilege”), 216 (“PMI is a Privilege and Still Not the Devil”)
• Credit Professional Interview: Episode 164

Important Tips for First-Time Buyers

1. Start Early: Credit improvements take 60-90 days to reflect. Begin working on your score 1-2 years before buying.
2. Check Real Reports: Use AnnualCreditReport.com, not Credit Karma. Credit professionals have never seen a report without mistakes.
3. Strategic Credit Use: Keep card utilization at 7% (not 0% or 100%) for optimal scores.
4. Medical Debt Relief: New 2025 CFPB regulations remove $49 billion in medical debt from credit reports.
5. Down Payment Strategy: Don’t wait to save 20% if it means years of extra rent. A good credit score can make PMI more affordable.

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Listen to the episode here

Improve Your Credit:  Homebuying 101 – Step 3

Understanding Credit Scores And Their Impact On Home Buying

Credit scores and buying a home. It’s a necessary evil to help you get to your stable financial future. There’s a ton of information, but mostly misinformation, out there about that four-letter F word, FICO. Step three is everything you need to know about credit scores for buying a home. Let’s get after it.

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What is happening, my How to Buy a homies? Welcome to step 3 of the 10 steps. Welcome back. Here we are in the How to Buy a Home educational series. I am super excited to talk to you about credit scores. No one’s ever said that before in the history of mankind. I’m hopped up on diet Dr. Pepper, and I’m wearing my Footloose shirt with Kevin Bacon.

Let’s get going. In the show’s library, you’re going to find seven entire episodes dedicated to this one topic, credit scores, so you know it’s important. The better your score, the more options that you’re going to have to get a better mortgage interest rate on your loan. You’re going to get a better selection of loan products, and it can save you lots of money or even help you qualify for a better loan in the first place. For our episode, I’ve got seventeen different credit score tips, but there are even more tips than that in the show’s library.

Those seven episodes I told you about, episodes 3, 8, 56, 61, 64, 90, and 199. I’ll have JT put those numbers for you in the show notes, and you can use those as research because they all go deep into everything that you need to know about credit scores. Start here and then go there for more tips. Your credit score is the most important thing that you need to get in line when you’re getting your home mortgage, and everything you’re trying to do to get your first home.

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We have a lot to get to, and make sure you step around for a huge brand-new tip for 2025. A ginormous change that’s going to affect fifteen million Americans. These tips are going to help because your credit score is number one in what I like to call the big three, your credit score, your debt, and your savings, to maximize your purchasing power. The best thing to do is work on all three of the big three simultaneously.

Truly, you should be doing that 1 to 2 years before you think you want to buy a home. Now, here’s your first tip. The reason working on your credit score is listed first in the big three is because everything with your credit score takes time to accomplish. Changes go slowly when you’re working with the credit bureaus, and it takes time to boost your credit score. The sooner you begin, the better your results. That’s tip number one.

When should you start working on your credit score as soon as you can? Time with a credit score is everything. Let me explain how it works. When you’re building your credit score, every single step, whether you’re gaining positives or you’re taking negatives off of your credit score, they all take time. The credit bureaus have their systems and it sucks, but you have to work in their systems. That system is jacked up. No argument from me.

When should you start working on your credit score? As soon as possible. Time is everything when it comes to your credit score.

Most of the time they take 60 or 90 days to show any changes in your score. The best way to do it is not to get freaked out and pissed off at them. You just know it. Now you learn to beat the system by working within their slowest molasses system. You need the time on your side, and the more, the better. In those back catalog of credit episodes I mentioned, I interviewed some credit professionals.

Common Myths About Credit Score Fixing Debunked

When we got to the topic of time with your credit score, using that as a tool to make sure you can boost it up, they talked to me for over an hour. In our episode, time is the first topic of a bunch. Let me get the highlights of what they said. The gist is that when you start, your credit score is way more important than what you start to do.” We’ll give you those details on what to do, but time. That’s how you beat the credit game.

Here’s an hour’s worth of credit score education in 2 or 3 minutes. They said, number one, “There is no magic wand. You cannot just boink and change things right away.” The pros told me you need to get on it. They also said this. “Don’t let a bad score scare you. There’s nowhere to go but up. Everything in credit takes time. The longer you wait, the less you can improve it. Don’t bury your head in the sand. That time is going to heal all wounds.

Don’t think that because you had some late payments in the past, you’re never going to be a homeowner. It’s all fixable, but it gets more fixed the sooner that you begin this process and work that time.” In fact, they told me, “The people with bad credit scores, they see much faster and larger results than other people because they’ve got the room.” Another great tip they gave was, “Remember, this is a starting point, and it’s not going to be all fun and rainbows and bubblegum along the way.”

It’s not super sexy, and it’s not exciting to work on your credit score. Learn to celebrate the mundane. If you’re busting your butt on your credit score and it goes up ten points, go get yourself an ice cream. The credit pros also reiterated one of the tips I gave you at the beginning of these ten steps. Look at your credit reports. They also said, “Don’t look at those credit karma scores or reports you get from your credit card companies.

Look at AnnualCreditReport.com.” The pros said that they’ve never seen one credit report without a mistake, not one. The pros tell you that you should expect mistakes. That’s the way it works. It takes time to fix those mistakes. If you’re not looking to buy a home right now, guess what? You can do one thing. Improve your credit scores with minor modifications. Where do you find all that? I told you, AnnualCreditReport.com. Federal law allows you to get a free copy of your entire credit report, not just your score, every twelve months.

You can get one from each of the three credit reporting bureaus. Don’t go to any place else first, start there, because this is free and unbiased information, and it was created for your protection. They’re not trying to sell you anything. There’s more information in those previous seven episodes. Once again, if you’ve got a low score, don’t be scared. You should jump right to episode 90. That’s where you’re going to find all the credit hacks if your score, as teachers like to say, “Needs improvement.”

Tip number two. The magic trick. This is the magic trick. It’s called an authorized user. Now, I know said there’s no magic wand to do this, but there is an incredible magic tip. Overall, there are no shortcuts. It takes guidance, tips, and time, but this shortcut is so massive. I even used this at 49 years old, and it raised my credit score 40 points in less than two weeks. That’s why I call an authorized user the magic trick. I’ve been diving into credit scores for the last five years, and I can tell you, this is the most underutilized credit hack that there is. That’s not just me talking. This is what the credit pros told me. I’m going to mention this a few times. I’m going to do it later, but put it in your brain. Authorized user, it’s a magic trick. Save that thought.

Tip number three. Understanding your FICO and Vantage scores versus the credit scores you get from Credit Karma and other apps. Now, when you’re planning to buy your home, whether it’s next month, next year, or two years from now. A lot of times, you might get frustrated and use a lot of four-letter words when you’re trying to figure everything out to buy a home. You’re probably even going to scream the F word, and no, it’s not that one. I told you.

Maybe you’re going to scream that one. It can get crazy. The real F word with credits, FICO. That’s the Fair Isaac Credit Corporation. Now, if you’re asking who the hell is Isaac and why is Isaac the ruler of all things credit. I don’t know. It’s the way it is. I do know that you might have a $12 unpaid water bill from like three apartments ago that you forgot about, and you don’t know what’s on your credit report, and that’s what’s tanking your score. Here’s a not-so-fun fact about credit scores.

All the credit score data that you’re getting for free on all of those apps, they’re not the scores that are really going to be used when you’re buying a home. It can be super misleading. The reason for that is because you have several different scores. What do the apps show you? They show you the score that’s going to get you to dig deeper into their app and use some of their services and pay them to fix your score. They’re going to show you the score that is most likely going to be something that’s going to initiate you working with them.

They are selling you something. Most of the time, they’re trying to sell you monitoring services or credit fixing services. By the way, they’re also selling your data to everyone else. That’s why they’re giving that away for free. In general, most of the apps that are working with credit, it’s a completely different demographic fiscally for the people that they’re working with. These are designed to help people get early credit for people who are trying to get early credit lines, like for your rental application, your car loan, or maybe an appliance store, so you can buy a refrigerator.

Those scores don’t necessarily apply to the score that you’re going to be using when you’re trying to get a home loan. According to the credit professionals, you have 28 different credit scores from the three different credit bureaus. Experian has ten scores, TransUnion has nine scores, and Equifax has nine. That’s one reason if you’re looking at different scoring entities, you’re going to see a ton of different scores. To confuse things even more, here in 2025, in October, the end of this year, the lenders are supposed to all be swapping to a Vantage score four point zero.

That’s something different. Of course, they also say, “We’ll still be using the FICO 10T score. Your 28 different credit scores have names. I don’t make the rules, people. I report them. Last time I checked with a credit professional, most of the free score reporting entities, your banks, your apps, your credit cards that put it on your statement, they’re not reporting to you the score that the home lenders are going to be looking for.

Since the rules are changing here in 2025, you have to work with a professional lender that’s going to know the score types, the exact ones that are going to be used for a mortgage. I’ve talked to several different lenders who say that sometimes, even when they’re getting scores to give to a lender between the three different bureaus, they often see a 50 to 75-point swing in the different numbers reported. That is a huge difference. What do you do about it? It’s like that weird lump you have on your shoulder. I think you should get a professional opinion. Let’s keep going.

Tip number four. Credit scores for buying a home come in tiers. Let’s see what Isaac and his fair credit score are all about when you’re talking about home mortgages. FICO scores have this ridiculously stupid range. It’s 350 to 850. Really, Isaac? You couldn’t just do 1 to 100? Why start at 350 and go to 850 at the top? It is so random. We have to play within the rules of the game, and we know how it works now, so here we go. You can get a home loan with a credit score as low as 580.

As I discussed in earlier episodes, maybe this isn’t the best option for you. You can do it, but you should. What do you do if you get a 580? Do you go after it? I assume that everybody listening to this has done steps 1 and 2 of the 10 steps. Once you’ve decided and believe, and then you get your guides, I know that you’ve got a stellar real estate support team. Those guides can help show you how to bump up that credit score while you’re reducing your debt and saving money.

How Mortgage Lenders Use Your Credit Score Tiers

You probably have to do all three, anyway. Start on your credit score and instead of thinking about buying at 580, try to bump it up while you’re getting all the rest of your ducks in a row. When you see how the tiers work, you’ll understand what I mean. The mortgage lenders put your score in twenty-point tiers. Starting down at 580, the tiers go up. Every tier means you get better rates, better fees, all that stuff. 580, 600, 620, 40, 80, 700, 720. The A tier is 740 to 760. Anything above 760 that’s an A plus. Each tier you go up, the better rates and programs you can access.

I’m going to do a quick side note. This is for you wonderful anal spreadsheet people. I hope you heard that correctly. A 760 or an 820 credit score, they get you the exact same home loan. 760 is the top. Mr. or Mrs. 811 credit score, you can unclench your butt cheeks a little bit and relax. At 811, you could get ten hard pulls on your credit, and you’d still be in the top tier for buying a home. More on that later. We’re going to discuss exactly how they determine your tier when we discuss your mid-score that comes in a little bit, as well as how the banks use both scores if you happen to be buying a home with you and someone else, like a partner.

Tip number five. How do they make up your credit score? That’s the pie chart of credit. Now, you need to know what the credit score pie chart looks like. That’ll help you focus on the tips from here and the other episodes that are going to help improve your weaker areas on the pie chart. It’s broken down like this. Your payment history, paying on time, that’s 35%.

Your amount owed, which also gives your credit utilization, how much are you using, how much do you have left, that’s a 30% piece of the pie. Next is your credit history or the length of time that you’ve had credit established. That’s fifteen percent of the pie. Next is your credit mix, that’s your types of credit, that’s ten percent. Another ten percent of the pie that’s new inquiries or requests for your credit to be looked at. You can Google this and get familiar with the pie chart.

Tape it up and put it on your wall. In the library of credit episodes, I also go into detail on all the formulas that work best for each area of the pie. If you take notice, that pie does have one thing, and it’s the only thing that you cannot do anything about. That fifteen percent piece of the pie that talks about your credit history cannot do anything about that unless you have a time machine. Wait a minute. Unless you have the magic trick, authorized user. That’s a teaser, it’s coming soon.

Tip number six. It sounds dirty, but it’s not. A soft pull or a hard pull on your credit. Now, this has to do with that piece of the pie I mentioned to you, the credit inquiries, ten percent of your pie. When it comes to getting your credit pulled, which is called a credit inquiry, this is one of the most misunderstood parts of how your credit score works. I explained in detail all of this in episode 199, but I’m going to give you a quick summary because I need to bust this gigantic myth. Too many people are way too afraid of getting a hard pull on their credit, but the only way you can get full approval for a home loan is to get a hard credit pull.

It’s mandatory, but because everyone’s so freaked out about it, they wait too long to do it, thinking that that one credit inquiry is going to tank their credit score. Here’s how it works. A hard pull on your credit is only anywhere from 2 to 4 points. People will postpone having a lender do a hard pull on the credit, and a lot of times they’ll wait until three months before because they go, “My approval’s good for 90 days. Some of them wait until two months or even a month before.

The deal is, if you don’t get all the information that you get from what we call a hard credit poll earlier than that, then you might not know that you have to correct some things. Once again, I know I’m going against the grain. Everything on the interwebs tells you, “Don’t get hard credit polls, it’ll screw up your credit score.” Getting a hard credit pull is not nearly as destructive as you have been told. In fact, I can tell you this. I’ve seen numerous home buying deals destroyed because they didn’t want to take an inquiry hit.

How A Hard Credit Pull Affects Your Score

They refused a hard credit pull. When they were ready to buy a home, and they were all stoked, that’s when they decided to do it. Guess what? They found a mistake on their credit report because all of them have them. They end up losing the home they wanted because they didn’t have the time to fix it. Do you see how it all pulls together? On the other side of that, in all my years, I have never, ever seen anybody lose a home loan when they got a hard credit pull that just took 2 or 4 points when they did it 6 to 12 months before they’re ready to buy a home.

I’ve never seen it tank a deal because you have plenty of time to fix it when you do it that far out. I get the fact that you’ve been told, “Hard credit pulls are bad. Don’t get them, it’ll tank your credit score.” Focusing on a hard credit pull that’s only 2 or 4 points when you’re 3, 6, or 12 months out from buying a home. That’s like focusing on pennies on the ground while you’re walking over twenty-dollar bills. Don’t freak out. If you talk to someone and you’re eight months out from buying a home, that’s cool. It’s only a minuscule 2 to 4 points, and you’ve got eight months to make it up.

Again, it all comes together. That’s where you use the time to fix it. Some of you might need to do one month ahead of time. Some of you might use what we call a soft pull, which isn’t a complete credit report, but it gives them a gist, and it doesn’t affect your credit score. There’s no inquiry with that. When you get advice from a professional, you’ll find that sometimes, to be sure about everything and to verify everything that’s on your credit report, a hard pull is the best way that you can determine that.

It’ll give you those super creative money-saving programs that you could be using for your home purchase. That’s the goal. All we want to do is explore all your options. Options are everything. Yes, take care of your credit score, but don’t be so psycho overprotective that you ignore professional advice. You become one of those tragic stories of someone who waited too long and lost their dream home. Follow your pros.

They will let you know if you’re better served with a soft pull or a hard credit pull. If you are super early in the process, again, getting that hard credit pull gives you time, and time fixes credit problems, and they’ll have plenty of time to make up that teeny little point drop. For more details, episode 199, it’s all there. What’s crazy about this whole hard-pull freak-out thing? Who freaks out the most about that? It’s you, 760 plus people.

You 820 credit score people are the people that come to me and have a conniption when the lender tells them, “Maybe we should get a hard pull on your credit score.” Captain Careful. Start early, and then you can use the time to work the system. Now that you’re educated, don’t believe the myths. You might cost yourself what you want for a minuscule little problem that wouldn’t have affected you negatively at all. There, I use minuscule twice in that tip.

I’ve teased you long enough. Tip number seven, be a magic trick, an authorized user. Now, the full information on this magic trick is all back in those old episodes I mentioned at the beginning. You need to hear all about it, but I do want to make sure that I mention one little disclaimer before I get into the details on this trick. We live in a jacked up and unfair world, and equality and finance is, unfortunately, not a thing.

This magic trick, I realized that this is for people who are in a position of some privilege because you need a family member with decent credit to be able to use this magic trick. I totally understand that not everyone can do this. That’s why I gave you some other tips first before I revealed this magic trick. You might be new to the show, but here’s what I got going on. My mission is to educate everyone with all the options, from a $100,000 buyer to a $2 million buyer.

I realized that for some of you out there, you might not be able to access a family member who has a long and good credit history. Here’s the thing. If you don’t have a family member to lean on in this process, and you cannot use this tip. If you’re still here and you’re still listening to this, the reality is when it comes to who’s going to be able to buy a home, I would bet more money on you. I think you can do this. I think you’re going to better your credit score and become eligible to buy a home before the people who have other people to lean on because buying a home, like I said in steps 1 and 2, it takes deciding and believing not just in the process of buying a home, but believing in yourself and what you can do in the process. Guess what?

You’ve been doing that your whole life. You’ve only had to make things happen. This magic trick might not be for you, but I’ve seen this a bajillion times, and I can tell you this, “You got this.” Now for the rest of you privileged people. If you’re lucky enough to have the option of a family member willing to help you out with very little effort from them, you can improve your credit score in a huge way. When it comes to the pie chart I was talking about, you got the history. You only have the years that you’ve been here on the planet, and how many years have you been gaining credit?

With this magic trick, you can add 10, 20, 30, or 40 years of credit history, even if you’re only 22 years old. You do that by becoming an authorized user on someone else’s card. You can do this with a partner or a family member, and it won’t affect that person’s credit. I do this with my dad, and yeah, I had to explain it to him in multiple different phone calls. I get it. They’re going to freak out and go, “It’s going to do damage to my credit score.” It does nothing to their credit score. You can tell them no effect on them whatsoever.

I still think to this day that my dad doesn’t believe me, but he let me do it anyway. My score went up. I told you, 49 years old. I’m telling you, this will not affect their credit, which leads me to the side note. This is a very important warning because of this whole authorized user thing. There are companies out there that are selling authorized users to people who don’t have a family member. That’s what we would call in the business world, a shyster. Run away from that. Never do it with a stranger. Don’t get desperate.

When it comes to credit scores and credit repair, there are so many scam artists out there, people who call themselves credit specialists, and they prey on desperate people who are seeking any help to get them out of a hole. Don’t do an authorized user with a random company, and don’t find a credit specialist who you saw on Instagram and thought, “This is going to be great. Let me give them all my money.” If you’d like a credible credit specialist, I’ve talked to a whole bunch over the years and vetted them all out. I do know a couple of good ones.

Episode 164 happens to be one of them. You can also hit me up at HowToBuyAHome.com. Go there and ask David. Again, I never make anything from these people. I want to make sure that if you’re going to do this, you’re doing this with people that at least somebody you know knows that they’re doing a good job. Here’s how the authorized user works. You want to make sure that your family member has a good credit line and has no late payments on that card. You want to pick a card with lots of available credit and lots of years of credit history.

All they have to do is call the credit card company and ask that you become an authorized user on that card. All that happens is the credit card company adds you to the credit card, and then bam, you get decades of great credit on your credit score plus lots of available credit because they’ve got big credit usage on that card. You got a double whammy there. Your history and your credit usage. Again, the credit card company sends that card to your family member, which I told my dad to cut it up and throw away.

I don’t need to see it, I don’t need to know about it, and I don’t need to know the card number. All I want is that the credit bureau to see that I’m on that card, and then I get the credit history and the available credit. It doesn’t matter what I do with all my other stuff on my cards, it doesn’t affect them. We’re not tied through the scores. We’re tied through that one card, and they’re in control of it, and they control how that card is going to affect their credit score as well as now, yours. The last little tip on this one. It’s not good to do this with American Express.

You don’t get the same thing. This is for Visa and MasterCard. The older the card, the better. It’s magic. Once again, if your score sucks, this could be even better news for you. I’ve seen readers that

had their scores jump a hundred points because they didn’t have a lot of credit and they had a low credit score. They use this trick. It’s magic.

Tip number eight. Your credit score affects a lot more when it comes to getting a home loan, more than everything else you do in your life. It affects loan rates, loan program options, and PMI. The way you’re buying a home in 2025 looks like is that to stay afloat in this new world of higher rents, and for many of you, you’re paying them for way too many years, a lot of people cannot wait all those years trying to save twenty percent down on a home.

They look to create a rent replacement strategy, and that means you’re probably better off looking at a lower down payment option so you can buy a home earlier, not having to save year after year after year while you keep paying rent. This is pretty much the way people have to do things in this unaffordable housing world. Under twenty percent means that you will pay PMI. What does that have to do with the credit score? First of all, PMI is private mortgage insurance.

Your credit score not only affects the mortgage interest rate that you’re going to get and the loan programs that you qualify for, it also affects how much you pay in your fees and the fees you pay for PMI. The higher your credit score, the lower your PMI. If you’re a savvy person who’s done some research, and you heard that PMI is for suckers, go back and listen to the math in episode 198. It’s entitled PMI and is a Privilege. You can listen to episode 216, the follow-up entitled PMI is a Privilege and Still Not The Devil.

We’ll get to tip number nine, rapid re-score. Now, if you’re all set to buy a home, but when you’re doing your research, you find a mistake on your credit score, or you paid something off and you cannot wait the 30, 60, 90 days for it to post with all the credit bureaus, most of your lenders are going to have a rapid re-score option. What it does is that with the right letters and documentation, you can get your score recalibrated in under a week.

I know, I told you they were super slow, but if you pay them, they’ll do stuff. If you didn’t heed my advice from the top of the episode, and you didn’t start your credit cleanup early, or maybe you’re right towards the end, and suddenly you get a big chunk of money, and now you can pay off your debt. If that was calculated into your credit score, you would have a 1 or 2-tier jump, and that would save you a ton of money. That’s where you talk to your pro support team, and they’ll get you a rapid re-score. The trade-off for a few hundred bucks to do that could save you thousands. Sometimes, I’ve seen it save people tens of thousands of dollars or even better. Maybe that’s the tip you need to get a little bit higher loan approval, and now you can buy your dream home.

The Importance Of Mid Scores When Applying For A Loan

Tip number nine is the mid-score and your partner’s score. These are two different things, but let me explain it to you. Once you work with a unicorn lending team, you’re going to get that accurate FICO or Vantage score. That’s the one that’s going to be used by the banks when you’re getting your home loan. Now what they use is they look at all three scores and they take the mid-score. They do not take your average of all three from the bureaus. They take the three appropriate scores from the three different bureaus and use the middle one.

If your scores are 752, 738, and 739, that means your mid score is 739. That puts you in the 720 to 740 tier. Even though if you add those three up, 752, 738, and 739, your average is 743, which would put you in a different, better tier. That’s why it’s important you understand they use the mid-score. That’s why it’s important that you understand that you need to get this stuff way early so you could start working on your credit score to get that mid score as high as you can. No, you definitely cannot figure out your mid score from what you get on Credit Karma or one of those other apps.

What if you’re buying a home with somebody else? What if you need both your and your partner’s income to qualify for a loan? Yes, it’s the same thing. They use your mid scores, but here’s the deal. They take one mid score and the other, and then it’s the lowest mid score that they use for everything in determining what loan you can get. They don’t take the two and put them together and average them. They don’t use the higher one, they use the lowest. Know thy partner’s credit. You guys need to work together or someone’s going to be sleeping on the couch.

Tip number ten. Now, these are some tips for bad credit or less-than-perfect credit. These tips, they’re things that a lot of you can use to jump up one of those twenty-point tiers or maybe two. Here’s the breakdown of how they look at it. 800 to 850, exceptional. 740 to 799, very good. 670 to 739, good. 580 to 669, fair. Below 580, as I said, my elementary school teacher would say it needs improvement. If you need improvement and you want to jump a bunch of tiers, it’s all there in episode 90. Here are the highlights of the things that you can do if you’ve got a lower score to jump up quickly.

The first thing is time, shocker. The next thing is the magic trick, the authorized user. There’s strategic managing and pay down of your debt. The next thing is asking your creditors for more. Ask for credit increases. The next one is always pay everything on time. Number six, we go over in that how to fight the power and dispute those mistakes. The seventh tip in this one is to eat the frog. That means deal with all the crappy stuff first. Start with your collections and your negatives ASAP. It’s an old saying. What do you do if you get a big frog and you have to eat it? Do it first thing in the morning.

Gross, right? I don’t know why they made that up. Number eight, secure your future with a secure credit card. More on that in the episode. Number nine, get credit for paying rent. You heard me right. More on that later. Number ten, make sure you have a good credit mix. All of these are explained in detail in those back-reference episodes. A lot of that gets talked about in episode 90. Here are a few more for you. The credit cards report to the credit bureaus at different times. Once you get deep into this, you figure out when your statement hits, then the times that you pay your cards will increase your credit score.

The next tip, a lot of people ask me, “I’ve got a credit card, what do I do with it? Should I pay it all the way down?” No, you don’t want to pay down to a zero balance. In fact, if you have a zero balance on a credit card and there’s no activity for six months, it stops reporting to the credit bureaus. It’s a weird thing, but it’s how they hook you. When you’re trying to get it down, the magic number from the credit professionals that I talked to is seven percent.

See, if you’ve got a $100 limit on your credit card, you want a $7 balance. The minimum that you want is a balance of 50%, but to start reporting positively, you need a balance below 30%. You want to go below 20% and finally get to that 7% to get the best scores. Now, if you’re trying to build your credit and you want to go out and look at credit cards, there are a couple of great sites out there, like Bankrate and NerdWallet, that will give you the real skinny on what cards to go after. Just be careful.

When you start building your credit, you’re going to get a whole bunch of offers. Don’t jump at every offer that comes in your email or gets mailed to you old school. Just because someone sent you something doesn’t mean that credit card is the best thing for you. Make sure that whenever you’re looking at anything when it comes to credit, check it against the Better Business Bureau, the BBB. Now, if you don’t know what that is, it’s not a boy band from the ‘90s. Google it. The Better Business Bureau.

Another big tip, which you’re going to hear a lot throughout the podcast, is to automate your payments. Automate. It’s the best way to dummy-proof everything. One of those past episodes has a crazy, super-advanced hack. If you’re stuck with cash and you’re trying to buy a home, take a listen to episode 56. It’s not for everybody, but it’s a good one. Give it a listen.

Automate, automate, automate! It’s the best way to dummy-proof everything.

Tip number 11. Revolving Credit Versus Installment Credit. This is important for you to understand. Revolving credit is what affects your credit score most. You are lowering your revolving credit usage and keeping higher available revolving credit. That means you’re going to get a higher credit score. It shows Isaac and all the credit gods that you can resist the temptation because you have available credit available to you, but you don’t abuse it.

That’s how you get a high score. Now, the other type of credit you can get is called Installment Credit. This is important to understand. Installment credits are loans that have an end date. It’s a one-time loan amount, like a car, a personal loan, or a student loan. They don’t affect your credit score as much since you don’t have the ability to abuse it or not abuse it and show them that you’re responsible. This revolving credit versus installment credit, understanding how that works and how the credit bureaus see it, this is why the myth that student loans kill your ability to get a home has been greatly exaggerated.

It’s an installment loan and, therefore, doesn’t get looked at the same way. Here’s another important tip for you. If you’re new to working on your credit score and you’ve got a debit card and it’s got those magic little MasterCard or Visa logos on it. A lot of times, people will use that thing that has something to do with their credit score. It doesn’t. Even though it says Visa or MasterCard on the card and you hit the credit button on the pin pad, that’s not building your credit. That is not revolving credit. That’s a piece of plastic that connects to your bank account, which is cash.

It’s not credit. That is working like a checkbook. It’s a Visa and MasterCard accepted. A checkbook is a rectangular piece of paper that you use to write checks on to buy stuff. Sometimes, people still use them at the grocery store, and I want to punch those people. If you’ve got a credit card and a debit card, here’s another tip. Never use your debit card. Hang on, stay with me. I’m not telling you to build up your credit and spend wildly and buy all kinds of stuff. Think of it this way. You can use that card in the same places.

They both have the little logos on them. Wherever you would use your debit card, use your credit card instead. All you have to do is set a reminder on your phone in a couple of days, and with the same funds that you were going to use out of your debit card account, pay off the credit card. Think about it. You’re going to buy groceries, gas, fast food, whatever. Now you put it on your credit card, and then you transfer the cash over.

Super easy to do. All you have to do is send a little reminder for yourself. You have everything you need on your phone to pay your credit card with the exact same cash that you were going to use. Now you’re building your creditworthiness by showing those credit bureaus that you’re responsible. Now, if you keep doing that enough, maybe you can call the credit company and ask them for more credit, which gives you higher credit availability and, thus, a higher credit score.

The Power Of Paying Down Debt The Right Way

Tip number twelve. How much should you pay down on your card? I already talked about this, 50%, 20%, or the magic seven, but you can hear it all in episode 64. Tip number thirteen. I know why we did that because tip number thirteen is about how you’re paying stuff off. This is where I’ll go over what’s called the snowball technique, as well as a little information on credit card consolidation loans. If you use the snowball method of paying down your highest interest rate or your highest balance card first, a lot of people do that to crush their debt.

You start with one, and you keep it going, and it snowballs down. Here’s the thing. If you’re using that, awesome, but do not pay them down all the way to zero. Especially, please do not close an account. If you close an account, you lose all the credit history. Credit history is a big part of your score. Don’t worry if it’s got bad mistakes on it. Eventually, those late payments and all that will fall off. Once you close it, you never get that history back. If you don’t know what snowballing is, a lot of people out there will ask you to pay them for it.

When you close an account, you lose all its credit history—and credit history is a big part of your score. Don’t worry if it has past mistakes; eventually, late payments and other negative marks will fall off. But once you close the account, you’ll never get that history back.

You don’t need to pay anybody for it. Research it online. All it takes is a little bit of discipline, and it’s super simple to figure out. Here’s another thing that you really shouldn’t do. Unless you are in a dire situation, you shouldn’t get a credit card consolidation loan if you’re trying to buy a home in a couple of years. The reason for that is the way a credit card consolidation loan works, it closes all your accounts and puts them into one different loan. What happens then? You lose all your credit history.

If you’re thinking about buying a home, even like in the next 4 or 5 years, if you can, the better play is to do some research on how to do things like the snowball system and how to make sure you’re making payments above the minimum without using a consolidation loan and working a system with discipline to make sure you can keep your accounts open instead of using that loan which closes your accounts. It’s just a game, peeps, and you got to learn the tips and the hacks if you want to win.

Tip number fourteen. Use your rent on your credit score. Now, I have been reporting this for years. A couple of years ago, I started seeing John Cena and a purple cow do commercials about it. The good news is that here in 2025, there are even more ways than ever that you can use your rent. That giant payment you make every month to increase your credit score. Episode 61 talks about it, and that was back then. The good news is that now there are even more ways to get your rent accepted.

Of course, the bad news with that is that because that’s happening, there are even more people out there trying to sell you this trick when you can do it on your own. They want to make a profit, and a lot of them are overcharging to do it. Ask your unicorn lender professional before you go out and pay someone to make sure that your rent is counted in your credit score. If your score is low, or you don’t have much credit, or you have a zero credit score, did 45 million US adults have no score? Like zero.

That’s not a bad thing. A zero credit score doesn’t mean that you’re not credit-worthy. It means that probably you’re responsible and you’ve never taken out credit cards. I have seen someone with no credit score use some of these tips, and all of a sudden, because it’s a zero, it boosts them way up to this beautiful credit score, and you can get two years of rental history even when your score’s at zero. Cannot do that with a credit card. You only get one day when you open it up. This is a big positive change for renters. Have your support team give you the best ways to use your responsible rent payments in your favor and get your score up.

The 2025 Medical Debt Change That Impacts Credit Scores

Tip number fifteen. Again, the magic trick authorizes the user. If you’re looking for a leg up, please, if you can do it, research this magic trick. I did it at 49, it worked for me. Tip number sixteen. This is the 2025 big bonus for first-time homebuyers. It’s so big, I said that in such a stupid way. Big bonus for reals. In 2025, the Consumer Financial Protection Bureau, CFPB, in January, issued new regulations barring medical debts from American credit reports. These new rules ban credit agencies from including medical debts on consumers’ credit reports, and they prohibit lenders from considering medical information in assessing the creditworthiness of borrowers.

This is awesome news. They originally proposed this in the summer of 2024. They push it through for Biden left. Hang on, gang, this could be reversed after Trump takes office. The way it was reported was that they’re finalizing the regulations and the CFPB dared the incoming Trump administration and all the Republican allies in Congress to undo these rules because they realized that this is extremely popular and could help millions of the people out there who have a tank in credit score because of their medical debt.

The agency is going to be removing $49 billion in medical debt from the credit reports of roughly fifteen million Americans. This could be astronomical for people’s credit scores. The CFPB thinks that this might boost the average credit score by twenty points. It could be a lot more for you, so check it out. Tip number seventeen. Ask your unicorn team for the right tips for you.

Homies, you heard me say it before. Buying a home is an individual process. When it comes to your credit score, the same thing. Talk to your pros. In fact, here’s a simple example that I’ve seen too many times to count when somebody doesn’t talk to someone and tries to do it on their own. I’ve seen this where people want to buy a home. They start researching how to do it. The internet floods them with all that, “You got to get pre-approved information.”

Of course, that’s created by the lenders out there trying to capture them. What do they do? They immediately think, “That’s what the internet says. That’s step one.” They go down that rabbit hole of getting pre-approved and shopping rates for months and months. They spend all their spare time researching how to get the best interest rate because they think that’s how I’m going to save the least money. Somehow, let’s say they find my podcast, and then they end up with the unicorn team.

They find out that “Over these past few months when I’ve been doing that, if I’d been working on my credit score, I could have improved my score 1 or 2 or 3 of those 20 point tiers,” which would have saved them tens of thousands of dollars. Meanwhile, during that period when they were trying to figure out how to get the best rate, they forgot the most important thing about getting a rate. The interest rate changes every day. In fact, it’s changed 982 times in those months you’ve been looking at it.

Why You Should Always Consult A Professional Lender

All the research you did on interest rates doesn’t mean squat. The market controls the rate. You don’t control the market, but you could have used that time to work on your credit score. Let’s get after it, people. Get your team and do this right. Do the steps in the correct sequence. You can use these tips on your own, sure, but with a guide, you’re probably going to get more efficient ways to do it, which will give you more effective results. Woo, that was a lot. Steps 4 and 5 are up next. You can do this.

Important Links

PAST EPISODES

Credit Score Deep Dives

• Episodes 3
• Episode 8
• Episode 56
• Episode 61
• Episode 64
• Episode 90
• Episode 199
• Credit Professional Interview – Episode 164
• Episode 56
• Episode 64
• Episode 61

PMI Episodes:

• Episode 198 – PMI is a Privilege
• Episode 216 – PMI is a Privilege and Still Not the Devil
• Consumer Financial Protection Bureau
• Better Business Bureau
• Annual Credit Report
• Bankrate
• NerdWallet

This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!

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