This is one of the most important videos I’ve made so far: how to get a credit card, why you should care, what factors increase your credit score, and how that can ultimately help make you money. I got my first credit card at 21 years old, after banks turned me down for a loan on real estate - this is from my experiences building my own credit.
Your credit score shows banks how responsible you are with your money. The scores range from about 300-850, with the best rates being available to those who have a score above 740. It shows banks how likely you are to potentially default on a loan and they adjust their interest rate according to their risk.
They calculate your credit score based off several factors:
-Length of credit history - the longer you’ve had it, the higher the score
-How much credit you have available to you - the more money you have available, the higher the score
-How much of it you actually use - the less money you use, the higher the score - this is called utilization rate
-On time payments - if you’ve never had a late payment and always pay on time, the higher the score
-The diversity of loans you’ve had - if you have variety of credit cards, auto loans, home loans, the higher your score.
-Total inquiries - this means that every time you apply for a loan or credit card, it’s marked. The more times you apply, the higher risk you’re seen, since people who apply for a lot of credit in a short amount of time might be desperate for money, so this temporarily lowers your score. But lets not worry about this since for most people just starting, it won’t make a difference.
Credit card misconceptions:
-You do NOT need to pay interest to increase your credit score. Pay it off in full, you do not need to keep a small balance each month.
-It does NOT hurt you to check your own credit score. I use CreditKarma regularly to keep track of my score and where it’s at.
-It’s also false that having too many cards will decrease your score - the opposite is true. The more credit you have available, generally your debt-to-credit ratio will be a lot lower, which will increase your score.
-Do NOT close out a credit card, especially if it’s an old account. When you close a credit card, it also closes all that credit history - which is a huge component of a good score. Keep your credit cards open even if you don’t use them, or if you pay an annual fee, see if they can downgrade the card to a free account.
-NOT all debt is bad. There can be good debt - like a mortgage, or an auto loan where your money is better off invested somewhere else - or bad debt, which is that expensive Hawaiian vacation for $7000 that you couldn’t afford but you did it anyway because you put it on a credit card. Debt is a great way to leverage your money and have it work for you, earning MORE money in your investments than you pay off in interest.
Now keep in mind, a credit card is something to use responsibly. Just put a normal amount on the cards each month as you would cash or a debit card, and pay it off in full. That’s it. It’s really, really simple. Eventually you can take advantage of great credit card rewards that’ll get you free trips and perks. Look up credit card churning for more information.
My favorite credit cards:
-Bank of America Cash Rewards:
https://goo.gl/1xwB4B
-Amex Gold Card:
https://goo.gl/d2y4Gc
-Chase Sapphire Preferred:
https://goo.gl/Iq0BiX
-Chase Sapphire Reserve:
https://goo.gl/22mf4I
Add me on Instagram: GPStephan
Add me on Snapchat: GPStephan
Thanks for watching!
Your credit score shows banks how responsible you are with your money. The scores range from about 300-850, with the best rates being available to those who have a score above 740. It shows banks how likely you are to potentially default on a loan and they adjust their interest rate according to their risk.
They calculate your credit score based off several factors:
-Length of credit history - the longer you’ve had it, the higher the score
-How much credit you have available to you - the more money you have available, the higher the score
-How much of it you actually use - the less money you use, the higher the score - this is called utilization rate
-On time payments - if you’ve never had a late payment and always pay on time, the higher the score
-The diversity of loans you’ve had - if you have variety of credit cards, auto loans, home loans, the higher your score.
-Total inquiries - this means that every time you apply for a loan or credit card, it’s marked. The more times you apply, the higher risk you’re seen, since people who apply for a lot of credit in a short amount of time might be desperate for money, so this temporarily lowers your score. But lets not worry about this since for most people just starting, it won’t make a difference.
Credit card misconceptions:
-You do NOT need to pay interest to increase your credit score. Pay it off in full, you do not need to keep a small balance each month.
-It does NOT hurt you to check your own credit score. I use CreditKarma regularly to keep track of my score and where it’s at.
-It’s also false that having too many cards will decrease your score - the opposite is true. The more credit you have available, generally your debt-to-credit ratio will be a lot lower, which will increase your score.
-Do NOT close out a credit card, especially if it’s an old account. When you close a credit card, it also closes all that credit history - which is a huge component of a good score. Keep your credit cards open even if you don’t use them, or if you pay an annual fee, see if they can downgrade the card to a free account.
-NOT all debt is bad. There can be good debt - like a mortgage, or an auto loan where your money is better off invested somewhere else - or bad debt, which is that expensive Hawaiian vacation for $7000 that you couldn’t afford but you did it anyway because you put it on a credit card. Debt is a great way to leverage your money and have it work for you, earning MORE money in your investments than you pay off in interest.
Now keep in mind, a credit card is something to use responsibly. Just put a normal amount on the cards each month as you would cash or a debit card, and pay it off in full. That’s it. It’s really, really simple. Eventually you can take advantage of great credit card rewards that’ll get you free trips and perks. Look up credit card churning for more information.
My favorite credit cards:
-Bank of America Cash Rewards:
https://goo.gl/1xwB4B
-Amex Gold Card:
https://goo.gl/d2y4Gc
-Chase Sapphire Preferred:
https://goo.gl/Iq0BiX
-Chase Sapphire Reserve:
https://goo.gl/22mf4I
Add me on Instagram: GPStephan
Add me on Snapchat: GPStephan
Thanks for watching!
Ty for all your advice very useful
Keep in mind its okay to go and get a loan from the bank and keeping it in a savings account to just pay the loan back off its a great way to build and expand your credit history and a young age!!!!
Man you just gave me the game I have a small loan I’ve been paying just got a unsecured 1000 dollar credit card with my bank and I’m about to do this with it. I didn’t know how I should use it and I almost used it wrong… thanks bro appreciate the great advice.
Sorry if you answered this already, but I haven't found it so far. Do you rotate through your credit cards on any kind of a schedule? I noticed a card I hadn't used for a long time lowered my limit.
You are the best at explaining stuff
Thank you so much Graham!
I just got approved for my first card. Been working my ass off. My family was broke, in debt, bankruptcy. So i feel like ive accomplished something important. I lucked out and lived out of state for a while. One of my room mates drilled it into me to use it on stuff id pay for anyway. So..thats the plan. Im curious about this airline miles thing… what card would be good for that. I want to see the god damned world. Mentally im still that broke trailer park kid wearing 2nd hand kmart clothes and rotting shoes. But it feels like i can breath now. That im doing something right.
I’m concerned with debt because I don’t understand the changing laws. I always feel like if I have debt I leave a door open for someone to leverage it against me. And they would use the legal system to do it. But the math in this video makes a lot of sense. Thank you for the video.
I wait till the end of the month ? Or do i just pay it when it posts
Thank you for you’re video. I am a mom of two boys and I been working 2jobs for two years, so I decided to talk to a lender about buying a houses he told me I needed fix little things on my credit before they can consider giving me a loan. Your video help me understand the credit cards.
THANK YOU SO MUCH !!
I was going to finance a motorcycle, but by the time I build my first credit score to apply for a card that could handle a vehicle payment would be 12 – 14 months. I could save up 8000 easily.
In short a credit card is something that shows lenders you are a high or low risk of paying them back. Credit cards are used to get something without having to save up for it and buy in full. The money comes out of your pocket so it's like borrowing money and paying back. If you don't pay it back they take more money from you.
I already knew most of these things from common sense reading about how credit works.
HEY CAN YOU MAKE AN UPDATED VIDEO PLEASE. I WANNA BE LIKE YOU MAN, THANK YOU
Nice and to the point I fucks with you 💯💪🏾
Thank you for this video! Watching it felt like a genuine friend giving me advice.
But how do I increase my credit limit?
Thank you very much ☺️ for help us. And, also it looks how you love the topic and the big knowledge that you have in the topic. That's admireble.
Dude this really helped a lot man, im glad this video exists because you taught me a lot in this video. KEEP IT UP😁👍🏽
Question, can I take out money from my credit card then deposit that to my debit card and then later pay off the credit card at the end of the month using the same money I took out?
It's funny how the lower credit scores are more likely to default so banks make it more likely they will default.
Honestly I was watching other YouTube guides, noticed this ones from my main man graham and immediately clicked off. Best financial YouTuber around
they need to teach this credit scores subject at schools!!!!!!!!!!!!!!!
just use ur credit card for gas money and foods and pay it off monthly!!! easy way to build credit…very consistent
Thanks for the info, the rebuild is on the way!
This guy doesnt explain that "using a credit card as your debit card"
Is not viable- when you use your debit card- the money comes out immediately- with credit cards- there's a lot to go into about paying it off to avoid interest-
Make sure to pay your balance based off of your bill closing date. The best way to treat a credit card is the same was as your electric and water bill- they send a statement every month for your usage but that bill is always due in the middle of the next bill cycle
Is putting 1$ on a credit card every month smart? Is there a minimum utilization?
when you say pay in full every moth are you meaning the monthly payment in full or do you mean pay back the full amount you spent on the card?
Is it okay to use lets say 80% utilization if your able to pay off the amount in full? Like if you have a small limit lets say $500. If you profit around $3000 a month for spending on whatever, and you use 350 of the 500 but you can pay off the amount is that still bad? Thanks