 Welcome back to another video. My name is Johannes Bottle and I made financial mistakes so you don't have to. In one of my last videos, I talked about financial intelligence and also the credit score. In this video, I will talk about the mistakes that I made when I first moved to the United States when it comes to credit score. And also, I'm also gonna talk about the things that I'm going to do to achieve an 800 score, credit score. 800 credit score doesn't really have a specific meaning. It doesn't really change anything. It's just like a goal that I set for myself. So whenever you wanna take out a loan for anything, a car, a house, student loan, they will look at your credit score first. Interestingly enough, if you wanna get a credit card, they also will check your credit score first even though you need a credit card to build credit so you can get a better credit card. And if you have a high enough credit score, you will obviously get better rates on loans, you get better credit card limits, and just everything will be better. Let's start. When I first moved to the United States, I was unaware of the entire credit score system because back in Austria, we didn't have that. That was a big mistake. Because I didn't have any credit, I was unable to lease a car, so I was forced to purchase a car. Back then, there was a big purchase because I only had a one-year student visa and I wasn't even sure if I was allowed to stay after that one year. On top of that, when I moved into my rental apartment, I had to put down a four-month lease security deposit which was an additional $10,000 just because I didn't have any credit. I got most of that money back because I didn't ruin the apartment, but still for the first couple months moving to the United States, that was a big chunk of money that I just had to use immediately just to get started. Now you probably think, okay, after this big incident, he will probably, you know, realize, okay, he needs a credit card, he needs to build his credit score. So it took me another year after I got my next visa, where I was like, okay, I'm gonna make it, I'm gonna stay in the United States, that's when I started working on my credit score. When I first got my credit card, I wanted to make sure, okay, this is now my time to build my credit score and I made sure I paid all my debt on time, every single payment. Now I'm sitting at a 770, 770 credit score and yeah, I'm reaching for the 800. But let's talk about the mistakes that I made so you don't have to make the same. First mistake, I didn't start immediately. This is the first mistake that I made and you should not repeat that. As soon as you're, if you're in the United States and you turn 18, you're allowed to apply for a credit card. Do that immediately. I would highly recommend doing it with a secured credit card, which is basically you just deposit money into your credit card and then you can use that as credit to purchase things. That way, you're not using money that you don't have, you can only use the money that you gave the bank. Even though it's a small amount of money, I started with $500 and I only used $100 every single month on that credit card just to build credit. You have to start somewhere. That will help you with your credit history and your payment history as well. Make sure you pay everything on time. This is very important because the credit history makes up 15% of your credit score. The next thing I'm gonna talk about is not a mistake I made, but it's something very important. You have to make your payments on time. I grew up in Austria and I never liked having credit cards. I was used to cash and debit cards. Basically, the thought process for me was if I have money, I will spend money. If I don't have the money, I don't wanna spend it. When I moved to the United States, things changed. I had to use my credit cards to purchase things just to build my credit and pay them back later. It is very important to not miss a single payment because if you miss just one, this will highly affect your credit score in a negative way. So making sure that you pay off all your debt on time in full is really important. This is so important because your payment history accounts to 35% of your FICO score, so your credit score. And that's a lot. Another mistake that I made was I spent too much money with my credit cards. Yeah. I thought the more money I spend and pay back on time, the higher my credit score. That's incorrect. Banks want to see you only use 10 to 20% of your entire credit limit. Using more than 30% of your credit limit will also tremendously affect your credit score. Again, in a negative way. Using more than 30% of your available credit is basically a red flag for creditors. Another mistake, I didn't diversify my credit. Usually people that have a very high credit score have a lot of different sources that boost their credit score. For example, it could be a car loan, a student loan, a credit card. Any credit they will use will help them boost their credit score. Why is it so important? It basically shows the creditor, here we go. How well you can manage different sources or different types of credit. So although like a diversification within the credit is important to achieve the best credit score, it only makes up 10% of your entire credit score. Another thing, do not get too many credit cards at once. Luckily, after achieving a solid credit score, I had already made some progress on educating myself on the entire system. So I was aware of the fact that I can't apply for a new credit card every other month. You should only apply for one credit card per year because it will make or leave a hard inquiry on your credit score. Every time you ask for a loan, every time you want a new credit card, lenders, creditors will make a hard inquiry on your credit score to just see how you've been doing with your money. And the more inquiries you get, the lower your score. So here's what I did. I started with a Discover secured credit card with a limit of $500. So I paid the bank $500 and then I was able to use that $500 to start building my credit. After establishing a solid payment history, Discover offered me a regular credit card with a higher limit and also 2% cashback on everything, all my purchases. After I surpassed the 700 mark on my credit score, I applied for a city double cash credit card, which also gives me 2% cashback on my purchases. And after hitting the 750 mark, I got the Chase Freedom Unlimited credit card, which had a nice $200 bonus after spending only $500 within the first three months and 3% cashback on dining, 5% on travel and 1.5% on all other purchases. Last but not least, I got my favorite card. I haven't even used it yet, but I just got it. It's the Amazon Prime credit card. I really wanted the Amazon credit card because I realized I spent so much money on Amazon, like for all the things like protein powder, like I need toilet paper, anything, I purchased it on Amazon and I get 5% cashback on every single purchase from now on. And that's huge. Now it's your turn. Take care of your credit score today and it will take care of you and save you a lot of money in the future. Thank you so much for watching. I'll see you next time.