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5 takeaways from “Maconomics” season one, episode three

Ro$$ Mac is sharing tips on how to improve your credit score on this episode of “Maconomics.” See here!

“Maconomics” is a weekly series on REVOLT TV, where Wall Street’s premier rapper Ro$$ Mac shares tips about making your money work for you for a change. Catch the insightful advice on it and start watching your pockets grow.

On this week’s episode of “Maconomics,” Ro$$ Mac talks credit. Credit is one of those very important life topics barely taught in schools. Though some are fortunate enough to have a person in their life who is smart enough to teach them the basics of credit building, not everyone is that lucky.

By the time adulthood comes around for those wading in the unknown waters of credit, a sudden realization that having it in good standing sets in, since it can have a positive or negative impact on the desired lifestyle.

If that’s you, Ro$$ Mac is sharing his knowledge about it and has some tips on how to improve your credit score on this episode of “Maconomics.” Take a look at five takeaways from the show below.

1. Understanding why credit is important

“At the end of the day, good credit is one of the most important vital aspects of being financially free in America,” Mac states in the video clip.

For example, when hoping to finance a car, having more than enough money to put down is nearly not enough because the dealership is going to look at your credit score, as well. Once the transaction for a new car is completed, auto insurance companies will also be looking at credit.

Your credit score also determines what kind of area you can live in, how much deposit is needed to put down for a cell phone, whether a company can employ you, and how much interest your home’s mortgage rate will be.

Credit affects all parts of life and depending on how high or low it is, your score will have an impact on how much money you build over the course of time.

2. What happens when you have bad credit

A rating of bad or poor credit is usually anything under a score of 650 and a score that low lets creditors know how responsible you are with money.

Though sometimes having bad credit may not be to any fault of your own, especially if your parents happened to put the light bill in your name as a child, creditors don’t know.

“Having bad credit means paying higher interest rates, which means you’re paying way more money to just afford certain basic things,” Mac points out. Especially when it comes to financing or getting a credit card, people with bad credit will always pay more interest in the long run.

“Going to get a $35,000 car with bad credit on a 20 percent interest rate, over the course of the loan, you’re probably going to pay an additional $20,000,” Mac adds. “Good credit, you’re probably only paying an additional $3,000-$4,000.”

3. Best way to build credit

The best way to build credit the fastest is by getting a secured credit card or loan, which is great for people with not so great or zero credit.

A secured credit card or loan requires that you put down a refundable deposit, which then becomes the credit limit. The bank then reports your paying habits to all three major credit bureaus — Equifax, TransUnion and Experian — every month. Some banks will even offer to turn your secured credit card into an unsecured one, thereby refunding the deposit if payments are made on time for at least six months.

As long as you keep making on-time payments, your credit score will gradually increase. It’s also important to note, the more aged your credit accounts are, the higher your score will reach in combination with punctual payment history.

4. How to fix bad credit

Not all is lost if you have bad credit. There are plenty of ways to fix your score without paying someone to do it.

First, check your credit score. The Federal Trade Commission makes it a consumer right to have access to your credit score for free every year using annualcreditreport.com.

Next, glance over the report obtained from all three major credit bureaus and be sure to check for any delinquent items that may be unfamiliar, and address any familiar past debts that can be removed by simply making a payment.

Then, peep your overall credit utilization. A 30 percent utilization rate is generally a rule-of-thumb, but ideally, credit usage should land between 10-15 percent. Just because Apple Card generously gave you a $10,000 credit limit doesn’t mean spend the entire or even half.

“Sure, you might have a $5,000 credit card bill and you’re going to pay it off in full. But, what’s actually being reported to the credit agencies is not that zero, but the credit card statement,” Mac says.

To be on the safe side, pay the balance before the bank has a chance to deliver the statement.

5. On the authorized user credit hack

Being added as an authorized user to the credit card of a relative or friend, who is responsible with their own money, is a great way to boost your credit score. If you have someone in your life with good credit and is willing to add you as an authorized user, all they have to do is call their bank and add you.

For this hack, it is not necessary to have access to this person’s credit card. The authorized user trick is solely to have their good payment history, age of their account and credit limit, reflect on your report for a boosted score.

“Obviously it’s some risk with that and you got to hope that [the person authorizing you] is going to still pay them credit cards off in a timely fashion. But, what it’s going to do for you is now you’re going to have a new credit history and you’re going to have a higher credit limit, which is going to help your overall credit utilization.”

Once the bank reports you as an authorized user on an account with a high credit limit and low usage, the boost in your credit score will immediately increase.

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