A good credit score is essential when it comes to buying a home. Knowing what factors influence your credit score and how you can improve it over time is important. Let’s look at the basics of credit scores and what homebuyers should know.
What Is a Credit Score?
A credit score is a three-digit number that lenders use to decide if you are eligible for certain loans or lines of credit. Your credit score is based on your history of borrowing money and paying bills on time. It reflects how likely you are to repay debt, so the higher your score, the more likely you will be approved for a loan or line of credit.
Factors That Affect Your Credit Score
Several factors affect your credit score: payment history, length of credit history, the amount owed, types of accounts in use, new accounts opened recently, and inquiries into your credit. Payment history is one of the most important factors because it reflects whether or not you have paid your bills on time in the past. Length of credit history means that longer accounts may help improve your score because they demonstrate that you have been reliable in managing debt over an extended period. The amount owed refers to the total amount of debt you currently owe; if this amount is low compared to other people in your age range or income bracket, it could help boost your score. Types of accounts in use refer to the types of accounts that you currently have active; having different kinds can also help increase your overall score. New accounts opened recently refer to any new accounts that you may have opened recently; too many new accounts can decrease your score because it signals potential risk for lenders. Lastly, inquiries into your credit refer to any requests made by lenders considering offering you a loan or line of credit; too many questions can also lower your overall score.
How To Improve Your Credit Score Over Time
The best way to improve your credit score over time is by making sure all payments are made on time every month. This will show lenders that you can manage debts responsibly and help boost their confidence in lending money to you. Additionally, try not to limit yourself to just one type of account—mix up the types (credit cards versus student loans versus car loans) so that lenders see variety when viewing your account history. Finally, don’t open too many new accounts at once; while having multiple types helps increase confidence among lenders, opening too many at once could signal potential risk-taking behavior, resulting in a lower overall score.
Homebuyers should understand their current financial situation before applying for a mortgage loan or line of credit for their home purchase journey because their current financial background will significantly influence how much they will be able to borrow from lenders and at what interest rate they will receive from those loans/lines of credits. By understanding the basics behind calculating a person’s individualized credit scores, homebuyers can effectively plan and make improvements accordingly which would ultimately lead them toward tremendous financial success when it comes time for them to apply for mortgages/loans/lines of credit for their home purchases!
1:32- 3:50 Hot topic in the credit world
4:09 – 5:30 Credit Score
5:44 – 6:01 How to get Credit Scores
6:46 – 9:31 Credit 101
9:46 -10:27 Background Check
11:17 – 15:11 Having a better credit score
15:20 – 17:41 Making the credit card company drop rate & payment
18:00 – 26:04 Tips to improve your credit score
26:14 – 28:21 The closer you are to zero the more points you get
29:11 – 31:24 Hot topic (Balance Transfers & Consolidation Loan)
31:36 – 33:24 Disputing Errors
33:35 – 38:56 Career Lookback
Devin: All right. Well, welcome to another Expert Interview. Really excited for today’s guest. We’ve got Don with us. Before we jump in and I have Don introduce himself as always, remember to like, comment, and subscribe to this video and the channel so that you can get the videos that are coming out. We’re putting out at least one a week and there’s some great experts coming up next. So Don, let’s jump straight into it. Why don’t you let everyone know who you are and what you do?
Don Oberle: Hey, Devin. Thanks for having me. I appreciate it. So my name’s Don Oberle. I’m the chairman and CEO of Credit iQ and what my firm and what I’ve done over the last 31 years is help people understand how the credit algorithms work, how to leverage to build wealth, and especially the segment of entrepreneurs and people who want to open up a business or expand their business and how to leverage this knowledge so that they can obtain… It’s not how much money you make, it’s how much money you keep. So how you keep the money and expand the business. And that’s pretty much. It’s a pretty broad spectrum of what we do, but that’s in a nutshell.
Devin: Love it. Well, thank you for making time. I know you’re busy. I know you and your team are always doing amazing things. So I appreciate you giving us a little of your time and knowledge. First question I always like to ask is what’s trending in your industry. What are some hot topics in the credit world?
Don Oberle: I would say… It’s funny. The word that I’m going to use is trended credit scores ironically. The algorithms have pretty much stayed the same. So Bill Fair and Earl Isaac in 1964 were mathematicians and they were hired by insurance companies. And so they had them develop the credit score trending algorithms. And so insurance companies been using scoring models far longer than lenders have been and employers, and it’s pretty much stayed relatively the same over the years, but in the last year and a half, two years, they’ve come out with… And they really haven’t announced it that by the way, a system called Trended Credit Scores and what it is is they’re now…
Don Oberle: Most people have heard, “Hey, if I keep my credit card debts low, then my scores will be good.” That’s true, or to zero balances. But now what they’re doing is they’re going a step further, FICO and the credit bureaus where they’re looking at trended scores over the last 24 months. So it’s really important topic that you need to understand, because it will affect you. In the old days, up until recently, what we used to do is, if a client was attempting to do a business line of credit or buy a commercial building or home loan, or what have you, we’d say, “Go pay all your credit cards to zero 90 days before the event. Lock the credit cards away, don’t put a penny on them because you get more points with a zero than you do 10, 20, 30, 50% on it and then don’t touch it. And then that’ll allow the creditors to upload a zero balance on your credit report. And then it’ll maximize that part of the formula which is a huge part of it.”
Don Oberle: Well, the powers that be have gotten a hit to that, that people are becoming aware how to manipulate a score now. Now they’re saying, “Well, let’s go ahead and go back two years. And if Devin hasn’t been paying his cards off to zero every month over the last 24 months, we’re going to take points away from you. That way you can’t game the system at the last minute.” So if you want to know what the biggest trend, that’s a really important topic that nobody’s talking about.
Devin: I could see that having a huge impact because you can’t wait now. Like there’s no… I mean, you shouldn’t have waited anyways, but now there’s definitely urgency because if you want to do something or make a move, now’s the time.
Don Oberle: Yes, exactly. Find out where your real scores are at. Most people get their scores from their credit card company, from Credit Karma, these free services and you know, nothing’s ever free. Right? And so the only way we’re ever going to see the real score is if a lender pulls it or a banker pulls it and gives you a report, and they’re expensive. If you’re not paying at least 30 to 50 bucks for these “lender’s reports”, “the lender scores”, then it’s not the real score. And generally speaking, people are walking around thinking, “I’ve got a 700 score”.
Don Oberle: “Where’d you hear about that?”
Don Oberle: “Well, I get it from my credit card company or I get it from the credit bureau themself as a consumer.”
Don Oberle: But what most people don’t realize is the devil is in the details, and in fine print it always says in the disclaimer somewhere, “These are simulated scores, how we think they work.” So FICO, they lease that data to the credit bureaus. They lease the data to the lenders and what have you. And unless it goes through their system and spits out the black box formula, you’re not seeing the real score. So that’s another big takeaway for your viewers today is that if you haven’t seen a true lenders report, you’re not looking at the real score. You’re looking at an algorithm simulation.
Devin: So with that, where do they go for that? I believe that’s something your company offers, but like how do they go get real reports they can actually see where they truly are instead of these maybe inflated scores?
Don Oberle: Yeah. So the only way to get it is if you’ve got a friend who’s in banking and you have them pull it and you get all three bureaus by the way, not just one, because they’re different. Or you can come to a firm like myself, our firm Credit iQ and we can give you a copy as well.
Devin: Awesome. So I love that takeaway already. So two really good things. So we’ve got a two year trend. I haven’t heard that. So thank you for bringing that up.
Don Oberle: You’re welcome.
Devin: I’m excited to see how that unpacks and then, yeah. Let’s make sure you’re looking at the right scores. Because if you’re planning, you need to know what you’re planning with.
Don Oberle: That’s right. Yeah. Plan ahead.
Devin: Perfect. So let’s talk about maybe just like credit 101. So why does the score matter? And maybe you could just give me the hit list of like, “Here’s the reasons why it’s going to impact you as an individual and as a business”, maybe just rattle some off.
Don Oberle: Sure. Gosh, I have 31 years of experience doing this, so I have probably hours of content to give you, but let me see if I can condense it. I’ll do my best. So what we all have to first understand is, what a credit score really is. It’s a risk predictor and that’s why insurance companies started using it in the sixties. And then later in the last decade, you’ve noticed most of the Fortune 500 companies, they use it as a risk predictor to hire people. Most people are aware of that. What most people are not aware of is that now in the last couple years that they’re also using it for employment, they’re using it for promotions. So what you could reverse engineer what I just said folks is if you’ve got a small business, what you could do.
Don Oberle: And I started doing this about a decade ago and I will tell you it works. For example, let’s say we won’t hire anybody in no matter how much we like them, if your scores are below 700. No exceptions. And I understand there’s life, there’s death, divorce, job loss, medical. I get it. I understand that. But it costs you, as the employer, a lot of money to train people when they have to leave, or the grass is greener on the other side, for retention, or the plethora of different reasons.
Don Oberle: So when someone has, let’s say a 700 score and you’re going to hire a candidate or promote them. And then someone has a 620 score. What they’re saying is there’s, let’s say a 30% chance with a 620 score that they’re going to be late for work, call in sick, or have lack of focus on the job because there’s a life event going on. Like I said, death, divorce, job loss, medical, the big four. Doesn’t mean they’re a bad person. It just means things are happening, which could relate to, depending on what kind of company you have. It could be an accident. It could be a lawsuit. We’ve done Caltrans for that very reason.
Don Oberle: We said, “Hey, we’d like to do these coaching with your employees to enhance their knowledge base, to leverage their scores higher so they’re not distracted, and then a lawsuit. That’s one type of benefit. And the other one once is obviously, be late for work, call in sick, have lack of focus on the job. So you could use this information where you’re hiring somebody and just don’t hire them below 700, it’s up to you. But you will also notice that the retention level will go through the roof. Like we had an 80% increase in retention when we started using this. So there’s a reason why the insurance company has been using it for so long. The banks. So I know that was a long answer, but that’s something you guys could use today in your own businesses.
Devin: So what’s the legality of pulling those, or how do I, as a business owner, go get those scores? Can I just go somewhere and pull it? Does the individual have to pull it? How do I do that?
Don Oberle: Yeah. Good question. So once again, there is the fake simulated scores you get as a consumer, even from the credit bureau themselves, they’re selling you a simulated score. Or the real one. So once again, you either have a friend in banking that pulls it, or you can come to my firm. Almost every application now that have been updated when you apply for a job, it says in there, “We’re allowed to do a background check which includes pulling a report and et cetera, et cetera.” So as long as that’s in your verbiage, which I should be surprised if it wasn’t, and if it isn’t, you need to put it in, that you can do a background check. Criminal, driving, credit, those three things. So as long as that’s in the verbiage, then you have the right to do that and they have to sign off on it though. Have to sign it.
Devin: I love that. Again, another takeaway. I was hoping you were going to go there because I know the first time we talked, I had heard it, but I hadn’t seen a company make it a standard like your company had. And then hearing that retention increase is critical, especially right now. Everybody’s struggling to recruit, and so if you’re struggling to recruit, you better be retaining. Otherwise, it’s going to become a double edged sword.
Don Oberle: That’s exactly right. And it shows up, it shows up, the data… It’s the 80-20 rule. 80% of time, it’s dead accurate.
Devin: Love that. So let’s talk about the savings side. So there’s got to be some savings for having better credit. What’s that look like and where might I see some savings if my credit score did go up?
Don Oberle: Great question. So if what we’ve seen over the last 31 years doing this nationally with business owners and consumers is that, if their income of the person that’s elevating the scores is a hundred thousand dollars or less a year, then we’re typically saving 3 to $600 a month, or you’re saving 3 to $600 an interest across the board. If it’s over a hundred thousand dollars a year, usually 600 to a thousand plus, depending on the income bracket. So let’s just take the average person a hundred grand or less a year. So how I came up with 3 to $600 a month, and it’s really accurate is that, once you achieve a 740 or higher lender score, not the fake ones, the credit [inaudible 00:12:02] like that, the real one. Then you can demand a 0% rate on a new vehicle, demand it. Except for Tesla, the only ones that don’t play ball.
Don Oberle: Yeah. And that alone, let’s say you’re at a 620 score, lender score, and you jump to 740, whether it’s through our help or just the education we do or knowledge, then let’s say you take a $25,000 car at as 620 score, jump into a 740, that would equate to about $175 a month in interest savings. A month. Now what business owners could… What could you do with the next $179 a month? I mean, probably a lot. And then once you’re at 740, you can demand a 9.9 fixed rate on a credit card. Not 18 variable or 24% variable, 9.9 fixed rate. And so if the average person is carrying, let’s say five grand in credit card debt, it’s actually more right now, but let’s just take five. That’s an easy, 80 to 100 bucks a month in interest savings. Easy. So you take 175 plus 80, and then once you’re at 740, you can demand a cheaper car insurance. So for you folks that didn’t know that car insurance uses it, like I said, they’ve been using it the longest.
Don Oberle: Home insurance uses it, so you could save money there. And then some business owners have what’s called a Surety Bond. Some of you know what that means. I’ll give you an example. We had a contractor up in San Francisco Bay Area. He builds real estate on homes and he’s about a 580 score when we started, then we jumped into 770, and we taught him these techniques I’m teaching you today. And he went back once he broke the 740 and renegotiated his surety bond for his business, he was paying $9,600 a year in a surety bond. It’s a lot because people can get hurt on the job. Once he applied it and just made one simple phone call, he emailed me and said, “Look, Hey, thank you so much. My new bill, 650 bucks a year”. It dropped from 9,600 to 650 a year. That’s huge. What could you do with that of money?
Don Oberle: And then the other piece is real estate which is really our specialty as a firm, because that’s usually the fastest way to create wealth. So for you business owners that still do brick and mortar, wouldn’t it be nice to elevate your scores and then go get at some commercial property. And then you rent out half the property and then the other half you’re there rent free with your employees and then you’re building equity. So real estate is one of the biggest, so generally speaking, we’re saving about… On a half million dollar property, easy 300 bucks a month, sometimes more. So if you add it all up, that’s an easy 600 bucks a month. I know that was a long answer, but I wanted to break it down for you.
Devin: No, it’s great. It gives everybody the buckets to kind of see where does it fit your case and where might it apply. On the insurance side or the credit card side? Is that just a call to my broker, my insurance agency? I call to the credit card company just saying, “Hey, I think you need to pull my score again. And you need to change this.”
Don Oberle: Yeah. Great question. So there’s a caveat with insurance because often when you call them and say, “Hey, I’m above 740 on my lender scores. And I need you to drop my rate and drop my payment or I’m going elsewhere.” And often they’ll say, “Well, I don’t know what you’re talking about.” And you’ll say, “Well then call corporate for authorization or I’m going to fund somebody else today.”
So you kind of got to play a little bit of hardball with them because they’re a little bit more crafty with it.
And sometimes the brokers don’t know, they just punch in your data, your insurance broker, they’re just little sheeples that are… The data is coming down to them and they don’t even have a clue of what I just
taught you today. Like I didn’t know about that. And then corporate is the one dictating all this in the
Devin: Gotcha. And then the credit card company is that easier then, you just call them and say, “Hey, I’m at 22.” I mean, what’s that conversation look like?
Don Oberle: Well, this is a little bit more in depth. I’ll try to give it to you in a nutshell. So you’ve heard the old saying, the third times the charm.
Don Oberle: Wrong. It’s the fourth time.
Don Oberle: Because they’ve been at this game a long time, they’re a lot tougher. So you call up your credit card company. Once you know, you’re at a 740 lender score, don’t go off to Credit Karma and you say, “Look, I’m above 740 in my scores. I want you to drop my rate to 9.9% fixed or I’m going to go with another card company. And they’ll say, “Well, we can’t do that.” And you’ll say, “I need to talk with your manager.” And then you go to the third manager and then the fourth manager. That’s usually when you get your way. And then by the third manager, they’re usually saying, “Well, maybe we can, since you’re so persistent Devin, maybe we can drop you from 18% variable to 16 or 14% variable.” “No, I want 9.9 fixed. I’m going to get it, right?” So you kind of got to know… We’ve got a whole script Devin that we can give your audience, the verbiage and the flow on how to do it and when do it. But that’s it in a nutshell.
Devin: Awesome. Perfect. I just want to make sure we at least gave them a little bit, but I know there’s an art there.
Don Oberle: There is a bit of an art form. Yeah. It’s not just, “Hey, I deserve it. You’re going to give it to me.” You got to build a work tenacity than that.
Devin: So let’s play kind of a fun little game. I’d love to hear your feedback on this. So I just did a Google search, “Top tips to improve my credit” and I have a feeling you’re going to have some fun with this. So what I want to do is I want to… There’s two lists here. They both have eight tips. So my thought is I’ll throw out everything that’s unique on them and just real quick. What’s your feedback? Yes or no? Is it going to impact the score or not? And let’s just see what people are saying. And then someone who has tremendous experience can actually give us some real knowledge.
Don Oberle: Absolutely.
Devin: So build credit fast. Number one, “Pay your bills on time.”
Don Oberle: That’s a good one. That’s number one. Yes. I agree with that.
Devin: Okay. “Ask for higher credit limits.”
Don Oberle: Oh, let me go back. Let me be more specific Devin. You have 29 days midnight. So let’s say the payment’s due on the first of the month Devin, you have 29 days midnight from that date to make the payment. If you go past the midnight, the 29th day, it becomes a 30 day late and that’s when they can get you.
Don Oberle: Some people go, “No, but I heard as long as they pay it by the 30 days. I’m okay.” No, it’s 29 days. Not on the 30th day because that’s when you’re late. So go ahead. Sorry.
Devin: Love that. Perfect.
Devin: “Ask for higher credit limits.”
Don Oberle: That’s a double edged sword. If you know how to manage your… If you’re very disciplined in managing your revolving debts and stuff like that, that’s good. You want to do that one year prior to a major event. So if you’re doing a refinance or purchase on a home, a big ticket item, or a car, don’t do that in less than one year prior, because when you do it you’ll lose points for a year. They don’t tell you that. And when they do that they’re going to pull… Within 90 days, you’ll lose between 5 and 22 points, 90 days for when they ping you, because they’re going to pull your report and then the new inquiry, you’ll lose points for 90 days, you get it back on the 91st day. So at minimum 90 days prior to a big ticket, you don’t want be doing that at all. Bad idea. Very bad Idea.
Devin: Any idea if I’m guessing at why they’re recommending that, is they’re talking about credit utilization, they’re trying to get you below the cut-off. So that is one of them, decrease your credit utilization. There’s a lot of myths and stuff out there on that. So where is the magic bullet? I mean, obviously zero is the goal, but are they trigger points that help?
Don Oberle: Absolutely. So with revolving debts, store credit cards, lines of credit, things of that nature, but it says revolving on the lenders report, those are the ones you want to pay attention to the most. So for example, if I pay off a revolving account compared to paying off an installment account, I’ll get many more points with revolving. Installment weight carries very little like paying off a car you would think would be helpful. It’s not going to help you that much. Revolving, you get the most bang for your buck. When it comes to revolving debt is that, if you have to use the card, then just don’t don’t ever exceed the 30% mark. So let’s say it’s a $1000 limit, don’t charge over $300. And when you get the statement in the mail or when you get the statement, pay it immediately to zero, that’s the perfect world scenario.
Don Oberle: If you’re struggling financially where you can’t afford to pay that credit card to zero right away, then what you want to do is look at all your revolving debt and say, “I’m going to start with my higher balances that are over 30% with the higher interest rates, pay those down below 30%. So if it’s a thousand paying below 300 and then the better interest rate cards then you pay those down below 30. And then, and then once they are all below 30, then go back to the higher interest rates, pay those to zero from 30 to zero. And then the same thing with the lower interest rates.” That’s the optimum way to do it. If your cash flow is a little tight.
Devin: Perfect. I loved your answer on this. I’ll ask it here so they can hear it on this interview.
Devin: “Become an authorized user.”
Don Oberle: Ah, in the old days that used to work great. But when the 2008 collapse happened, everybody was pointing their finger. “Oh, it was wall street. It was the banks.” Everybody was pointing fingers at everybody and then eventually they’re pointing at mortgage bankers. And so FICO… What we used to do in the old days is when we’d have somebody that had, what’s called a thin file or didn’t have a lot of credit, we would have them and go put themselves on aunt Suzie’s old JCPenney’s card or old Sears card they’ve had for 20, 30 years. The older the cards are the more points you get. And then we would build their file up, that way we’d get a home loan for them. Well, in 08, FICO got hit to that, to what people were doing, they were gaming the system and they said, “No, we’re going to change the algorithm.”
Don Oberle: Now what we’re going to do is if you have any blemishes at all on your credit report, like one little 30 day late payment from six, seven years ago, if you have one little blemish, we’re going to show the tradeline aunt Susie’s card on your file, but we’re not going to give you any score jumps because we know you’re gaming the system. So if you’ve got flawless credit and never a blemish at all that plan works. But if you’ve got one little tiny blemish it’s not going to help your scores at all.
Devin: Gotcha. And that’s what I said. I wanted to ask you because I love the answer to that and I know that’s something that has been out there for a while and I still hear it, but it’s good to understand when it works.
Don Oberle: Yes. Thank you, Devin. That was a great question.
Devin: “Use a secured credit card.”
Don Oberle: Yeah. So there’s no real difference on the credit score between secured and unsecured. It makes no difference at all. It used to be up until the year 2000, they changed that algorithm. And then you want to have at least three active, open, good revolving tradelines that are active, open and current, greater than 12 months old. If you don’t have at least three of them that are active, open and current, more than 12 months old, it’s almost impossible to get the high seven hundreds. It is very hard. So for those of you folks that don’t have at least three good revolving tradelines, you need to get three of them. And don’t pick store cards because what we’re seeing now is a trend of some of these stores are closing.
Don Oberle: We’ve got a client in Malibu, it was a four and a half million dollar deal. And we almost lost it because one of her… And her rate was at six and a half percent. We’re trying to get it to two and a quarter. You can imagine that savings. And we really had to talk underwriting into doing it because we said, “Look, she doesn’t have…” Some banks, they require you to have three when you do a home loan, it’s not just the score. “And well, she’s got a good score. Look, she’s never had any flaws.” And they said, “Well, no, we’re not going to do the loan because she only has two cards now.” We’re like, “But her third card just got closed because the store went out of business.” So it’s day dangerous to be doing store cards. Because if you’re making up to three, you should have Visa, MasterCard, maybe American Excess, I call it. I’d pretty be pretty shocked if they went under.
Devin: And I love that advice because I actually got bit with that too. I had enough revolving lines that didn’t matter. But I did, I had a car that I got like fresh out of high school and they just [decayed 00:25:31]. So I got the notice that said you can’t put anything on this card anymore. Well, not only could I not, it was a True store card, it wasn’t a Visa store card that at least I could swipe somewhere else.
Don Oberle: Right. If you lose 20 years of history on a credit card, you’re in trouble. By the way, on that note, if one revolving tradeline gets closed, the older it is the more points you lose. So let’s say it’s 20 years old and it gets closed, whether you close or they close it, I guarantee you’re going to lose 50 to a 100 points easy on instantly.
Devin: So that kind of goes to another bullet point on here. They have “Keep credit cards open.” And I know there’s a frequency that you at least need to charge something on a card. What’s that look like?
Don Oberle: Yeah. The perfect world is you won’t see this on the internet, because who controls the data? It’s the creditors
Devin: The ones who want you to use it.
Don Oberle: The ones who want to use it. You’ve heard that old urban myth, “Oh, when I was told, I just heard from somewhere that I’m supposed to carry a balance on my cards.” I’m like, “Who do you think started that propaganda? It’s the credit card company right?” So here’s the perfect world scenario. Remember the closer we are to zero, the more points we get. But you got to use it off on a frequency as Devin’s mentioning. So here’s the magic formula. Five bucks every five months. That’s it. Five bucks every five months. Buy a cup of coffee on it, every five months, you’ll be okay, you’ll be great. Now why did I say $5? Well, couple reasons five bucks is easy to pay off. And the second reason is we don’t know when the bureaus are going to upload your data. Whether it’s the 1st, the 15th, the 30th, we don’t know. So even if they upload a $5 bill, it’s not really going to drop our score much, will it Devin?
Don Oberle: Right. Now the reason why I say every five months is because on this sixth month, if you haven’t… If you’ve had a zero balance on your card and you haven’t been using it at all on the six month, it starts to go idle and then it will drop your scores. So what I suggest your viewers do today is, go to your Outlook, or I-Cal, or Google calendar. And I’d like you to do a reoccurring alarm to alarm you every five months for the rest of your life. When that alarm goes off every five months, you go to the safe, you pull all the cards out at one time. That way it’s easier to manage and keep them on the same cycle. “Was it JCPenney’s I did five months ago? Or was it Macy’s?”
Don Oberle: Just do them all in the same frequency, go put five bucks on each card, put them back in the safe. When the statement comes out, pay to zero. Here’s another note, wait until the statement comes, because if you pay it before the bill comes to you, it could go idle. Like Macy’s notorious for this, Capital One’s notorious for this. I don’t keep track of anymore, but some of these creditors, it’ll go idle if you pay it before you get statement, it’ll drop your score. Perfect.
Devin: That was going to be my next question. Do we need to wait for the statement or could I just pay it off tomorrow?
Don Oberle: Yeah. Wait for the statement. You can pay it that day.
Devin: So what I think is awesome about this, we won’t show them but here’s my stack. Because we met about five months ago and you gave me that advice and I said, “Oh, that’s great. I love that” because how do you remember it? So I’ve got my stack on my desk and today it’s like a cup of coffee, the gas, the one trip to the grocery store. It’ll all go on there and all that’s in my budget anyways. And then, I’ll wait for my next statements. They all get paid off and like thanks Don for the advice.
Don Oberle: Amen. You got it brother.
Devin: I love it. So let’s talk about, it looks like the last thing on here. Oh, there’s two. So let’s talk about balance transfers or like some creative loans to consolidate debt.
Don Oberle: That’s a good hot topic, trending topic right now. Because of COVID, because of various reasons, the finances are tight. We get this question a lot. “Hey, should we go out and do a consolidation loan? And consolidate some of this high interest rate debt into one loan.” That sounds great, but there’s never one box fits all. So I’m going to answer this very carefully, because I care about you and your viewers is that… Remember, this is not one box fits all. Think of this first, “What am I going to be doing over the next 12 months before you make a move with everything?” Because what you learned earlier about 10 minutes ago is that I have to plan one year out of the curve because when I open up a new tradeline, they take points away from a year for a year.
Don Oberle: Remember that? So when you open up a new account, a car loan, home loan, credit card, whatever, they take points away for a year, and on the 13th month, as long as you weren’t late on that new tradeline, they give your points back. So think ahead one year. So if you’re saying, “What do I do to consolidate this debt? And oh, by the way, I want to buy a house in six months”, that’s dangerous. If it’s a year out, perfect. Then what I would suggest you do is you go to your credit union or go to a credit union because they usually have the better consolidation loans. And generally speaking, depending on your income or assets that you have, they’ll usually go up maybe 20, 30 grand, but that’s pretty much about it for most of these credit unions.
Don Oberle: If you got a hundred grand, you’re going to need to do like a line of credit against equity of your property, like maybe a US bank loan line of credit. So if your debt’s up there above 30, 50, 100 grand, you’re going to need to get some real estate and then do a line of credit. US bank is one of the best, by the way, they have the most competitive rates and maybe do a line of credit with them. But maybe usually around 6% it fluctuates, but that’s a heck of a lot better than 18 or 24%. And then later, we enhance the scores even higher and then do a refi and then pay off that 6%. Now you maybe got, on a 30 or fixed, 2 and a quarter or 3%, something like that.
Devin: Perfect. Okay. So last question on the credit topic, it talks about disputing errors on your report. So I don’t want to get into the “how to” and the “whatnots”, but I mean what’s the impact there? Is that something… I guess this goes back to the, you need to pull your report and look at it.
Don Oberle: Yes. The first thing I suggest to do, whether you think you can have good scores or not, is see what the true lenders scores look like and get a copy of it. Whether it’s through one of your banker partners that does banking or my firm creditiq.org, and then look and see what needs to happen. Sometimes when we’re coaching a client, we just say, “Just do this and this and then your scores will go up. You don’t need to retain us to fix this little boo boo here because it’s not really hurting your score that much”, or maybe it is. And if it is what… My background is aerospace. So I think like an engineer. And so I also got into mortgage banking and business coaching for getting you ready for lending, things of that nature.
Don Oberle: And what I realized in life is there’s patterns with everything. And so there’s 38 questions that we can legally ask the bureaus, but we’re only allowed to ask one question at a time. Most of these credit repair companies, they just take stuff and throw mud at the wall and hope it sticks. It usually comes back, you’ve heard those. So what our firm is doing is we’re doing what’s called forensics which is way different than credit repair. And so it’s just knowing… Like maybe Macy’s, we would ask question number 10, where we wouldn’t do that with Nordstroms or the Board of Bankruptcy Court because we could deal with those two. So it’s just knowing who the creditor is and what to ask them specifically. And that’s how you really fix credit. When you’re throwing mud against the all, it’s going to be a long process and you may not be successful. I don’t know if I’m answering your question.
Devin: No, I think that’s great. And I think that’s the little advisory notice. A Lot of the stuff we’ve talked about today, you could take action on. You could do, you can move. I think when we get into the disputing, that’s where you need a good partner and you need to be really careful who you partner with to get it done.
Don Oberle: Yes, that’s right.
Devin: I’ve heard some of those horror stories and I’m sure another interview, maybe we’ll just talk about horror stories.
Don Oberle: Yeah. There’s a lot of those I hear about those.
Devin: Awesome man. Well, I appreciate the credit conversation. I always like to finish with two questions.
Devin: So the first question is, if you look back at your career, what is something you would tell your younger self? A piece of business advice or something to a professional that would help them get ahead faster.
Don Oberle: Good question. So I think I got my… Well, I got my foundation from my father. He taught me, my parents, faith, family, friends, faith, family, friends. And then as I opened my company 31 years ago and we expanded into seven different firms. It took me a few years to… You and I were joking earlier about how most people, they opened up a business because they had this grand idea. But they’re actually a little worker bee in the business. The business is managing them, they’re not managing the business. And what I figured out after about six years is that there’s a company in Marin, which wasn’t too far from our corporate office called Michael Gerber E-Myth.
Don Oberle: So what my suggestion to you is folks is that, get your foundation place, faith, family, friends. And you could also equate that to relationships, faith, relationships with Devin and I, and your partners, systems, your CRMs, your coaches, Devin once again, system and consistency. Relationships, systems and consistency, doing the same thing over and over and over. And I learned that from the E-Myth. So if you haven’t read it or listened to the video, E-Myth, Michael Gerber, it’s worth its weight in gold. I wish I had done that year one.
Devin: Well, that’s why we ask the question because we all have one or two of those lessons we learn in the journey where you’re like, “Man, it would’ve been a lot less painful had I known this one thing” And everybody’s one thing is different. It’s interesting, every time I ask this I’ve yet to have the same answer. Matter of fact, I’ve had people answer with books I’ve never even heard of. And I think I’m a decent reader. So that was my last question. And you already answered it. And we had actually talked about that before we started. So E-Myth is your recommendation. I second that wholeheartedly. I think that if you, especially, if you are thinking about a business, maybe you have a great profession. Maybe you’re just grinding the 9-5 and you’re like, “Look, I want to do something for me, for my family.”
Devin: You should read the E-Myth and you should talk to experts in the industry you’re looking at going into and really understand what it’s going to take for you to start a business. Yes, you may be talented at one thing, but business requires all things. So you’re going to need to know where you are going to supplement? When do you bring in really good partners? Your CPA, your insurance agent, your attorney, like these are things you’re going to need and make sure you budget and plan for that. So E-Myth definitely gives you that mindset to think through business different.
Don Oberle: A hundred percent.
Devin: Awesome. Don.
Devin: Well, any last words… Below this video we’ll have links to everything from Don. Don, anything that they should be on the lookout for in those links, any offers?
Don Oberle: Yeah. So Devin’s quite a good negotiator. And he says, “Hey, what can we do special for my readers and my listeners?” I said, “Look, normally we charge $300, whether it’s the business credit coaching or the personal credit coaching. Because we do bankruptcy law, tax law, the credit restoration using forensics, cleaning up credit and nobody’s charged $300 for a three hour coaching session in the zoom meeting and we’re national. And that includes a copy of the lenders report on you and your significant others. For your significant others, it’s just 50 bucks for you guys combined. Three hours, you get a copy of it. And so he’s negotiated down to only $50 for you, and his team, and the reader. So, thank you, Devin. That was very generous of you. So it’s 50 bucks. So when you click on the links below and you talk with one of our assistants, when you’re booking your scheduling appointment, just make sure you mention Devin. Otherwise, it would be three. So you need to make sure you mention Devin as company.
Devin: Love that. I appreciate that offer and our goal here is, we want to provide as much knowledge as we can. And we want to open doors to you guys so that you guys can move your business forward. I loved when you talked about like, “Are you leasing a building and should you own it?” I want to have that conversation with you. I have a couple commercial realtors coming on and maybe we do a little round table because it’s such a good strategic move to buildDon Oberle: Absolutely. Have the other renters pay your mortgage and then you get equity going. Same time.
Devin: Weird. It helps your balance sheet too, huh?
Don Oberle: Yeah, exactly.
Devin: Well, Don, I mean I appreciate your time. So much good knowledge in here. I’m sure we’ll do a part two and we’ll plug you into some future interviews. As always, thank you for your time and we’ll chat with you soon.
Don Oberle: All right, Devin. God bless you. Take care. Have a good day.