What does the Perfect Credit Profile Look like?

I want you to get the best possible terms for your next loan, whether it be for a mortgage, a car loan, or a credit card. With a perfect credit profile the lenders will be lining up for your business and you’ll get the best rates with top-rated lenders. You deserve the best, now let’s figure out what does the perfect credit profile look like?

0:00 Introduction
What are the other terms?
Credit Report: that is what the three major Credit Reporting Agencies (CRA) keep on file: Experian, Equifax, and TransUnion.
Credit Score: that is a score based on your credit report. Your score will vary because there are different kinds of FICO scores and the credit reporting agencies may have different information.
Consumer Education Report: This is the Junior Varsity version of your credit report. It’s not your real credit report or score. This is usually the report that you’re are getting for free and typically only looks back two years. It’s not very helpful for mortgages.
Credit Profile: This is a more complete picture of your credit situation.

0:23 What is a credit profile?
Your credit profile is the combination of your credit report, credit score, and other financials such as assets and liabilities.
Depending on what type of loan you want to get will determine the level of scrutiny.
There are a few types of credit you may be interested in. Common types of credit are credit cards which are revolving loans. Also, car loans and mortgages are common and those are installment loans.

1:48 What is the purpose of a credit profile?
The purpose of a profile is for lenders to put you into a category of similar customers. That category will determine how profitable you may be for the lender and the likelihood of defaulting on the loan.

2:00 What are some important aspects of the perfect credit profile for a mortgage?
Mortgage loans have the highest standards. They are looking for customers who have long term success with their credit. They also want customers who have a proven stable source of income.
The lender will analyze your:
- Credit reports from all 3 CRAs
- Credit scores
- Income
- Stability of employment
- Stability of residence
- Liquid assets
- Age
Your liquid income and assets give an indication of how easy or hard it would be to pay off a loan. Your job stability and housing stability show lenders that you are productive for the long term. You need a debt to income ratio of 55% for military veteran loans and 28-36% for traditional loans. They will calculate your average net income over the last two years.

3:12 What types of credit will help my credit profile?
Having different types of credit in your credit report look good because that’s more metrics they can use to judge your performance.
The Hierarchy of loan types
-Mortgage
-Personal loan
-Car Loan
-Student Loan
-Credit Cards
-Medical Bills
A small personal loan may substitute for a mortgage loan as a nice mix. Mortgages backed by Fannie Mae or Freddie Mack need at least two to three Lines of credit open for 2 years to back a loan. Or you could face higher interest rates.

3:59 What is a good credit card mix?
At least two bank credit cards lines such as Visa or MasterCard
And 1-2 store cards like Macy’s or Home Depot.
You want your credit utilization as low as possible, preferably under 10%. You may need to pay off CCs a week before the due date, because they may report your CC utilization to the CRAs before your due date. Another way to improve your credit utilization is to increase your credit limit on your card. If you have good self-discipline, then you should increase your credit limit.

I call about every six months to a year to get an increase. You have nothing to lose. If they ask how much increase then just ask for how much am I qualified? Max it.

5:19 Loans that don’t help your credit profile
Three loan types that don’t help your credit profile because none of them report to the CRAs:
1 Borrowing against your 401k
2 Payday loans
3 Rent to own furniture and electronics

6:00 When do you need to start working on your credit profile?
You need to start two years out of shopping for a mortgage.
In this time you:
- Reduce balances on your credit cards—so that you pay them down every month.
- You really want to be under 10% utilization per card and in total.
- Gives time for hard inquires to clear from your report.
- You can establish the best income to debt ratio to secure more financing.
- You can establish the best credit rating to secure the best interest rate.

6:23 Best book on credit

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[wickedcosmos]

So smooth and satisfying 😌 👌
Great delivery

[rosaliemata]

Wow, thanks for all the information! Very helpful 👍🏼

[hustlealways-angikindslows]

Very informative. Biggest lesson I learned from credit is when I tried to buy my first real car by myself after college. Sadly, some of us(me) need to learn through experience. Keep going earned my sub!!

[FollowMeg]

Thank you so much, this is so helpful!!! And Mmmmm I’m mack’in on the Dad here.