July 2, 2025
95: How to Build—and Defend—Your Credit Like a Pro
Think your credit score is just a number? Think again. In this episode, we break down the five key components of your FICO score—and why they matter more than you think.
Learn how to:
- Boost your score with smart, strategic moves (not guesswork)
- Avoid the myths that hurt more than help (yes, we’re looking at you, Dave Ramsey)
- Protect yourself from identity theft with simple, overlooked security steps
Your credit score doesn’t define you—but it does define your financial options. Tune in to take control of your credit and open doors to better rates, approvals, and opportunities.
Visit prenups.com/sugardaddy to learn more about fair prenups that help couples plan for a healthy financial relationship.
Watch this episode in video form on YouTube
To apply to be a guest on the show
You can email us at: thesugardaddypodcast@gmail.com
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Learn more about Brandon and schedule a free 30-minute introductory call with him
Please remember to subscribe, rate, and review.
Notes from the show:
Chapters
00:00 - Credit Score Introduction
06:15 - Five FICO Credit Score Factors
12:01 - Credit History, Mix & New Credit
18:32 - Payment History & Credit Utilization
19:19 - Freezing Credit Bureaus for Protection
23:20 - Credit Monitoring & Annual Reports
Transcript
WEBVTT
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That's what Brandon and I did after eight years of marriage.
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In today's episode, we are going to talk about credit, the five factors that impact your FICO credit score, checking your annual credit report and locking your credit bureaus for safety.
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This is a quick one, but it's going to be meaningful.
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Sugar Teddy Podcast yo Learn how to make them pockets grow.
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Financial freedom's where we go Smart investments, money flow meaningful.
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Hey babe, what are we talking about today?
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Today we're talking about credit and what goes into our credit score, because people need to know that there are a variety of factors that go into their credit score and what you can do to boost your credit.
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Yes, yes, unfortunately, credit is kind of a game you have to play sadly In the United States.
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Yes, in the.
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United States, but there is a correct way to play it and there's a wrong way to play it, so we want to make sure that you guys understand what are the things that you should be doing in order to help and fit your credit?
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Yes, and we all know, or should know, that your credit score can have a positive impact on things like the kinds of loans that you are able to get.
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If you need to purchase a vehicle, you want to open, sometimes, your utilities getting a new cell phone, putting a deposit down on an apartment, getting a new cell phone, putting a deposit down on an apartment, the higher your credit score, the more favorable your terms and conditions, as well as your interest rate, which we know is what's going to ultimately determine what you're paying and how miserable that interest rate is.
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So the better your credit, the better the interest rate typically is.
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Also, the big thing is we want to stress is that your credit score doesn't define you.
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So if you've had some issues in the past, you've had some hard times where it leads to you not having a good credit score.
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This is not to shame you or anything of that nature.
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This is to provide you with information to help you improve your credit score so that you have better options available to you.
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Like I said, it doesn't define you, but having a good credit score is very beneficial in a lot of ways.
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Yes, you are not your credit score.
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Having a low score from whatever has happened in your past is not who you are as a person.
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It doesn't make you a bad person None of that.
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We don't believe any of that here, so that is not what this is about.
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You know also, the thing is too is like okay, if you have an 800 credit score, congratulations, Good for you, but it doesn't change you.
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I mean, it doesn't make you any better than anybody else.
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Yeah, exactly, but there are things you can do to boost your credit score.
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But the first thing you need to know is that your credit score, your FICO credit score, is made up of five components and they are broken down by percentages, meaning that all of these five components are not weighted equally.
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So that's an important thing.
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So 35% of your credit score is made up of payment history.
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So this is why, if you've ever heard, don't close your oldest credit card, this is one of those reasons Because you want to have that long-term established credit.
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Because you want to have that long-term established credit.
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So one thing that my mom and I think your mom did for you is they put us on to their credit cards as authorized users when we were teenagers.
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So, technically, I've had an American Express card since I was 17 years old, right, so that is one of my oldest standing accounts, and what you want to make sure that you're doing is that you're paying any kind of bills on time.
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So your payment history on those longstanding accounts, on all of your accounts.
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But those longstanding accounts really are important.
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So if you want to help boost, for example, your child's credit score, you can make them an authorized user If you're using credit cards responsibly, maybe they get to put their gas on it.
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Maybe they, you know, when they go to the movies they put their charges on there.
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Then it gets paid off and so you have that good standing of paying your bills on time.
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That's what you're trying to look for here.
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That is the biggest part of your credit score is making sure that you do not miss payments on any type of loan that you have, so that you're not missing credit card payments, you're not missing student loan payments, you're not missing mortgage payments, those that is the heaviest weight on your credit score and it's also the hardest thing to come back from when you've missed a ton of payments.
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Because basically, what it is is that they take a timeframe I'm not sure exactly what the timeframe is from a year standpoint, but within, within, like just say, for hypothetical sake here say five years for the payments, and if you miss a payment it's going to take five years for that to roll off.
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That's terrible.
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So it's like you know, once you make a payment and you miss one, it's going to take a long time for it to roll off.
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So you could have kind of like a speeding ticket.
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Like a speeding ticket, you could have missed a couple of payments, like four years ago, yeah, and now you've made every single payment on every single one of your debts, but those four or few payments that you missed four years ago are still going to be there for a certain period of time until they roll off.
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Yeah so the biggest thing that you want to make it on time.
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Early is even better.
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Yes, because, like I said, this is the biggest weighted part of your credit score.
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Yes.
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All right, real quick.
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I want to speak to the person listening who feels like they can't work with a financial planner yet because they're carrying a lot of debt.
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First of all, I see you and I need you to know.
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You're not broken, you're not behind.
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You're not behind, you're just in a tough season.
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I created something just for you because I've had people reach out who are serious about changing their money story.
00:06:12.245 --> 00:06:16.165
But the full financial planning package just wasn't the right fit yet.
00:06:16.165 --> 00:06:21.362
So I built a new service through Oak City Financial that's focused completely on debt reduction.
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No fluff, no shame.
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You'll get a one-time planning session completely on debt reduction.
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No fluff, no shame.
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You'll get a one-time planning session, a personalized payoff strategy, your own financial dashboard and monthly coaching.
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If you want extra support while you climb out, it's $300 to get started and $100 a month.
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If you want that ongoing guidance, that's it.
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This is about helping you get unstuck, not making you feel like you failed.
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If this sounds like what you've been needing, go ahead and schedule a call with me.
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The link is in the show notes.
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Let's take the first step together.
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The next is 30%, which is your credit utilization, and this is how much of your allotted credit are you using.
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You want to keep this number as low as possible.
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So if you have a credit card with a $10,000 limit on it, you don't want to be sitting at $9,900 on that credit card because your utilization rate is going to be extremely high.
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If you can keep your utilization to under 30%, that's where you want to be.
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I mean the lower the better.
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Right.
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You want to have a lot of access to funds to this credit without actually using it.
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And ideally, in this scenario, when you're saying, like you know, a 30% credit eulage with the credit cards, we always stress Did you say eutelage I mean Is that a word Usage?
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We're going to have to look that one up.
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Usage.
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People love your words and then they'll send me messages like this really is a word, look, and I'm like okay, it just sounded really weird.
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I don't know.
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It came out of nowhere, if you know if utilage is a word, let me know.
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But for this scenario, you know, with the 30% usage you on your credit cards, we're still stressing Pay those off, yes, Monthly.
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Pay off the entire balance each month because you don't want to have to pay those high interest rates.
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Yeah, exactly.
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So this is also one of those things where if you're going to be calling which we always encourage on an annual, maybe even once a year, twice a year type basis calling your credit card companies asking them to raise your spend limit, because that helps inversely positively affect your credit utilization.
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If you have a higher allotted amount of money that you can spend and you're not spending it, then you have a lower utilization, which is again going to factor into this.
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So let's say you have a $5,000 credit limit on one of your credit cards, you've been paying on time, maybe you have a zero balance, you've had it for a couple of years.
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Call them A, ask them to lower your interest rate because you should be doing that and a lot of times they will, even if it's for a certain amount of time and then ask them for a credit increase because if you have a higher amount of money that you could spend and have access to but you're not using it, that will positively impact this credit utilization score, this percentage that you want to keep as low as possible.
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So typically you can do that once, maybe twice a year, especially if you're in good standing and the more credit you have accessible to you with the least amount of usage, the better.
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Yeah, and for those individuals who are trying to improve their current credit score, let's just say you are sitting right now at 40% credit card utilization.
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Asking for that credit increase could help drop you to that 30%, or maybe a little bit lower than that, and that will increase your credit score.
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Exactly.
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That's where that gaming part comes in.
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Maybe you haven't paid off that debt, but if your available credit goes up, then this is like fractions, right, you're inversely, percentages, percentages.
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Yeah, you're helping your percentage.
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Your credit history is 15% of your score and this is how long you've had those accounts.
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So, again, maybe you have a lot of money in the bank, maybe you have a ton of savings, but maybe you've been scared of credit cards and now it's time to purchase a car, get an apartment, and they're like, oh, you don't have any credit history.
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And you're like, yeah, I pay everything in cash, I have a ton of savings.
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Like this is what we want, isn't it?
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No, it's not.
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And this is why it's a game, because we need to.
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Especially if we're going to have teenagers, young adults, we need to be setting them up to have a credit history.
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And so, again, adding an authorized user, this is something that you can do to help boost that credit history for your children.
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Because, not having any credit history, even if you have a ton of money in the bank, you're responsible, you're paying everything in cash.
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Now, banks don't know that you're a responsible lender because you have not borrowed any money right, or a responsible, not lender, a responsible borrower, excuse me.
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So they want to actually see what your history is with borrowing money and they want to see that that's a positive one.
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So having some sort of credit history is going to be important, and it's 15% of your score.
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And I also want to stress here is that there are other people within the financial social media realm that are like oh, you don't need credit cards, you don't need credit for this and this and that.
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That can be true, but it's a much more strenuous process to do anything when you don't have a credit history.
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Can it be done?
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Yes, Would it be easier if you just opened up a small credit card Significantly.
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Brandon is talking about Dave Ramsey, who loves to say that you don't need to have a credit card or credit history to get a mortgage, which is true, but, again, the process of proving that you are a responsible borrower without a credit history is much more difficult and requires a lot more paperwork.
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And a lot more money up front.
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And a lot more money up front.
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So like, why go through that?
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Credit cards are not bad we talk about that all the time If you use them responsibly you understand these components, like Dave Ramsey looked me in the face and told me you don't use credit cards.
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Yeah, credit cards aren't bad.
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It's when you have bad habits and use credit cards incorrectly.
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Yeah, that's what it is.
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Right, but I'm glad that we have the credit history that we have, because anytime we've needed a mortgage, a refinance, a new car, whatever it is, it's been easy breezy because we have such a longstanding credit history.
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10% of your FICO score is new credit, so how often are you opening up new lines of credit?
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So, whether that's a personal loan, mortgages, car loans, credit cards, there's like this fine balance of like.
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This is the gaming part, because they don't want to see you opening up too many new credits.
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Right.
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Because then that's just saying to them that's a red flag that like you don't have enough money, why are you opening?
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So many new lines of credit, but then you don't want to have too little, because then that just affects your credit score from a negative standpoint.
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Right, this is also when, let's say, you are in, maybe, an underwriting process for a mortgage, your lender has probably said don't go and buy anything big, don't open a new credit card, don't buy a car, don't go buy furniture.
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You need to keep whatever's in this bank account and these balances as steady as possible.
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Right now we are not opening and pulling credit from other places, so you have to be strategic.
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You have to make sure that you're, you know, kind of playing the game.
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So we recently posted I opened two credit cards within a day of each other, which I haven't done in years, but one of them was offering 70,000 American Airlines miles and then the other one was offering 18 months of zero interest for balance transfers.
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And so, because we knew we were going to be moving some money around and some debts around, those two credit cards made a lot of sense and so I opened them back to back and I haven't done anything else since.
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Right, my credit score went down two points like a month after and then went up, I think, 12 points a month after that.
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Again, I knew that we didn't have anything else coming up.
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We weren't going to be opening up any big lines of credit, nothing like that and because of those two credit cards I ended up adding another almost $50,000 to my available credit, so my utilization score again went way down.
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So it's a game.
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You have to be strategic.
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But those store credit cards especially if you're a younger person and you're listening to this, and stay away.
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You're at Old Navy and Victoria's Secret and Kohl's and all these places.
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Those are the credit cards where I'm like, really stay away.
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Like those APRs are so high.
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The benefits do not outweigh the payments.
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Also.
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The thing is too like.
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This is when you also hear about the difference between, like, a soft pull and a hard pull for checking your credit score, and you don't want to have too many hard pulls because then that can affect your credit score negatively.
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Yeah, a hard pull is, you know, those car loans, personal loans, mortgages, soft pulls, depending on the type of credit card, is typically like a store credit card, um.
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So sometimes you'll see offers where it's like this is not a hard pull, you know, no dings to your credit score.
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This is why they're saying that, because if you have too many of those, it will negatively affect your score.
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So just be mindful.
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Yes, and then the last thing is your credit mix, which comes in at another 10%.
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So, 10% credit mix.
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This is what kind of available money do you have to you?
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Is it on credit cards?
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Is it personal loans?
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Do you have a mortgage?
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Do you have a car loan?
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All of those loans are set up differently.
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A personal loan is set up differently than a credit card.
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A credit card is different from a mortgage.
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A mortgage is different from a car loan.
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They want to show that you have like a mixed bag of loans.
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Again, not too many.
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Yeah, and once again, this is the game portion of it that you kind of have to play the game to make things easier for yourself in the long run Because, like I said, you could be someone that just has.
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You're doing well, you have a great income and you're like why don't I just pay everything for cash?
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This is where it can negatively affect you.
00:16:14.379 --> 00:16:14.578
Right.
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One thing that I really like to do and this is just me kind of being neurotic, but I really love paying off our credit cards throughout the month, so I don't wait until the payment due date.
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Some of our credit cards are set up on automatic payments, especially the ones where we don't typically spend, so maybe there's like a random subscription that's still on there for 30 bucks or something.
00:16:37.386 --> 00:16:40.784
I'd rather that automatically pay and may not have to think about it.
00:16:40.784 --> 00:16:55.605
But for the cards that we use for our daily spending, which end up being several thousand dollars a month, I like to just pay that as I think of it, I'll open my app, I'm looking at our points, our miles, et cetera, and I just make a payment.
00:16:55.605 --> 00:17:00.485
Because, again, all of that is going to factor into that utilization, right?
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If I pay off my card two weeks before its due date, well, guess what?
00:17:04.924 --> 00:17:17.949
My utilization of what I have available versus what I'm using has now been processed, and so those are ways where you can make smaller payments throughout the month, to kind of gamify this score.
00:17:18.015 --> 00:17:28.690
And a lot of times, if you're maybe going through a credit repair program, something like that, they'll tell you make multiple payments throughout the month instead of waiting for you know the actual due date.
00:17:28.690 --> 00:17:32.203
There's also a difference between the due date and the statement date.
00:17:32.203 --> 00:17:46.042
So those are things that you need to look at, because that is a rolling calendar when something is due and the statement close date is not necessarily the date that your actual bill is due.
00:17:46.042 --> 00:17:54.521
So looking at those and getting ahead of the payments from the statement close date versus the due date can be a very positive thing for your credit score.
00:17:54.521 --> 00:17:56.484
Yeah, all right.
00:17:56.484 --> 00:18:02.484
So, as a quick recap, 35% payment history, that's are you making your payments on time?
00:18:02.484 --> 00:18:05.077
Don't be in default, don't be delinquent, don't be late.
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Pay on time Absolute bare minimum.
00:18:07.943 --> 00:18:09.867
Pay the bare minimum instead of being late.
00:18:10.075 --> 00:18:17.278
One extra call out there is also there is a difference on your credit score if you are 30 days late compared to 60 days late, compared to 90 days late.
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And you'll see that on your statement.
00:18:18.861 --> 00:18:21.464
So like 30 days late is not as bad as 60 or 90.
00:18:21.464 --> 00:18:23.326
But just don't be late.
00:18:23.326 --> 00:18:25.130
Yes, that's the idea Don't be late, but just letting you know.
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If it happens, if you hit that 31st day, go ahead and pay it.
00:18:29.237 --> 00:18:31.022
So it's only 30 days late and not 60 days late.
00:18:31.103 --> 00:18:31.724
Yeah, that's true.
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30% is credit utilization.
00:18:34.462 --> 00:18:38.936
So again, how much of the money that you have available to borrow are you actually using?
00:18:38.936 --> 00:18:43.404
Try to keep that as low as possible, preferably under 30%, but the lower the better.
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15% is your credit history.
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So how long have you had available credit to you?
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10% is new credit.
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How often are you opening up new lines of credit for yourself?
00:18:57.528 --> 00:18:58.612
And then, 10% is that credit mix.
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Is it a mix of mortgage, personal loan, credit cards, car loans?
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We want to see that there are a variety of loans or assets available to you, money available to you.
00:19:09.339 --> 00:19:15.501
So keep that in mind the next time you you know open a credit card, get a loan, start paying off your things.
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That there are these five factors that go into your credit score.
00:19:20.163 --> 00:19:23.192
Now, these next two things we've talked about often.
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We cannot stress them enough, especially with all of the online shopping.
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Most of us have our cards saved to various portals or Amazons or you know whatever.
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It is Shopify.
00:19:32.587 --> 00:20:00.117
You need to make sure that your social security number on Experian, transunion and Equifax is stored as a freeze, so you can go into TransUnion, equifax and Experian and basically freeze your credit, and what that means is that somebody else cannot open a new line of credit in your name.
00:20:00.438 --> 00:20:06.689
So this is where we're talking about having your identity stolen, right?
00:20:06.689 --> 00:20:07.589
We don't want that.
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We don't want to see that people are opening accounts in our name, and so the easiest and fastest and freest way that you can do that is to freeze your credit bureaus.
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You can thaw them or unfreeze them at any time.
00:20:22.299 --> 00:20:26.559
So when I just talked about opening those two credit cards, I actually had to go in.
00:20:26.559 --> 00:20:29.192
Yes, it's a little bit of a pain in the butt, but guess what?
00:20:29.192 --> 00:20:44.059
I'm never tempted to open a random store credit card or, you know, get got at the counter to save 10%, because I have to go through a whole process to thaw my credit in order to open up my bureaus so that my credit can be pulled.
00:20:44.059 --> 00:20:53.518
So this is one of the best ways that you can safeguard yourself from fraudulent activity, as well as people opening credit in your name.
00:20:53.858 --> 00:21:00.832
Yeah, this is the easiest way, because when your identity is stolen, one of the first things they're going to do is try to open up a new credit card.
00:21:00.832 --> 00:21:03.740
Yep, because that's the easiest, because none of it has to be done in person.
00:21:03.740 --> 00:21:10.460
Nothing of that nature could do it all online, and so freezing your credit bureaus completely prevents that from occurring.
00:21:10.460 --> 00:21:19.576
So, you know, it's like I said, like just as you have to set up an online profile for each of the separate bureau bureaus, and then you can go ahead and easily take a button.
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You just click, go ahead and freeze it all.
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It is so simple, simple and so many people don't do it.
00:21:24.346 --> 00:21:27.337
It is crazy, like honestly, to do all three.
00:21:27.859 --> 00:21:41.539
take the maybe 20, 30 minutes to set them all up to set them all up and have them frozen I've had mine frozen for so long that, like I still have the paper copies of it because they didn't always have an online portal.
00:21:41.539 --> 00:21:45.386
Now on Experian, TransUnion and Equifax, you have an online portal.
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You can literally do it on the app.
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I mean, there's no excuse.
00:21:48.402 --> 00:21:53.663
So if you are still getting accounts open in your name, your identity is stolen.
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That's on you, Honestly.
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