Jill Russo Foster

Do You Need To Establish / Reestablish Your Credit?

I always get asked how someone should establish credit when I speak. Let me give you the answer. First whether you are establishing credit for the first time or reestablishing credit, this information is for you.

There are two main ways to establish credit:

The first option is to be a joint user with someone else. You would have to open a joint credit card with another person. That means that what you do (and what they do) will appear on both of your credit reports. If you both handle your credit wisely, that will reflect on both your credit reports positively. On the other hand, if one of you abuse your credit, that will reflect on both your credit reports as well. This can be a great way to establish your credit. Take a great thought when determining who the joint user will be. You want to be sure you are a joint user and not an authorized user – trust me there is a big difference.

The second option is to open a secured credit card. A secured credit card is where you give the credit card company a sum of money for them to give you the credit card (without risk or harm to them). Think of this as similar to a renter giving a security deposit to a Landlord. This is what you are doing. You get a credit card that looks and works just like a traditional credit card, but the creditor has minimal risk if you default. Remember, you are doing this to establish or reestablish credit.

When you need to establish or reestablish credit, you are a risky person (from a credit stand point) and you need to minimize the risk to the creditor for them to give you a chance. Once you have proven yourself, you can open a traditional credit card (with more favorable terms) and close the joint or secured credit card. Notice the order, I said in the previous sentence – do it in that order, please.

Keep your credit as best as possible and this will help you in the long run and give you the best possible finance down the road, but first you need to take this step to establish or reestablish your credit.

Credit FAQ’s

Whenever I do a workshop I am always asked about credit. I have taken some of the most frequently asked questions and compiled them into this issue of my newsletter.

Why did the creditor close my credit card? I didn’t own them anything. Creditor will sometimes close your credit card account if you don’t use it. If you want to have this credit card available to you, then make a purchase a few times a year to keep the account active.

My pay date and my credit card payment don’t coincide, what can I do? You can call your credit card company and ask them to move your credit card due date to another date that works with your finances.

How to I get a copy of my credit report? You have three credit reporting agencies – Experian, EquiFax and Trans Union. You are entitled to one credit report from each of the three reporting agencies once every 365 days. My suggestion is to order one credit report every four months to see your credit report three times in a year. If you sign up for this newsletter, you will receive a credit report reminder to order your credit report three times during the year.

How do I see my credit score? Your credit score if not a part of your credit report. You can get a close approximation of your FICO score at Credit Sesame, Credit Karma or Quizzle (the scoring part of the three credit reporting agencies). If you have a major credit card, most of them offer you your free credit score.

How do I know which credit card is right for me? That’s a hard thing to answer without knowing your circumstances, but I will give you some ideas for you to select which one is right for you. First thing to think about is how you will use this credit card. Will you use it and pay the balance in full each and every month. If so, then you want a credit card without any fees, because you won’t be paying any interest. If you are planning on financing purchases with multiple payments, then you want to lowest interest rate credit card possible, to pay less in interest.

My friend was declined for credit and wants me to co-sign for him / her. Should I? You need to think about this carefully. When you co-sign for someone, you are saying that you will be responsible for the payment, if the borrower doesn’t make the payment. In addition, how they pay their credit back will reflect on your credit report. So if they make a late payment, it will appear on your credit too. Make your choice wisely.

What’s the difference between a joint credit card and an authorized user credit card? Joint credit is exactly what it says, all parties apply for the credit card with their individual information are liable for what is charged (regardless of who made the charge). An authorized user is a person that you give a credit card to for them to use, but they are not responsible for the charges on the account.

What credit questions can I answer for you?

Understanding How Credit Works In Your Life

Let’s talk about credit.

First, loans / credit cards are when you use someone’s else’s money (borrowing). You are receiving goods or services now that you have agreed to pay for later (either in full or with a series of payments). This will help you to establish or re-establish your credit. This is different from a debit card, which is using your own money and not building your credit.

Now that we have that straight, credit is an extremely important part of your finances. It gives you that ability to purchase goods or services when you need it and pay for it later. Sometimes life requires you to make a purchase now (even when you don’t have the funds of your own to do it now). Last month, I came home from work to find our smoke and carbon monoxide detectors beeping – not a good thing. It wasn’t the batteries, which meant it had been 10 years since we replaced them. Ugh! There was an immediate need to have the electrician come and replace all 11 smokes and carbon monoxide detectors now. It wasn’t something we planned on in our July budget, but it needed to be done now. That’s where credit comes in. They were replaced and we will pay the bill in August.

Credit is something you will find you need in your life, whether it be for emergencies or planned purchases. Having good credit will be an asset to you in your time of need. Having good credit will give you more favorable terms (lower interest rate) for your repayment terms. The higher your credit, score the better chances of getting credit at the best terms. Putting it a different way, your credit score is as important to your finances as your GPA is to getting into college – both numbers are an important in your life.

To have the best credit, you need to use it but not abuse it. It’s easier said than done. You need to use your credit and make purchases as needed, but only purchase what you can afford. You need to make your payments on time and not max out your debt.

In my next newsletter, I’ll talk about credit and some frequently asked questions.

Simplification Month

If you have been following my posts in July, you see what we have done to simplify our lives. This is always a priority for me.

Did any of tips inspire you to make a change? What have you done? What did you do that we haven’t yet? I am always learning something new from my readers.

I would love to hear from you. Tell me what you’ve done. Tell me what you like to learn more about with your finances.

Simplifying By Making Choices

This stay at home time, we have made changes to our routine. Bills are still coming in and some are higher, but income stayed the same or was even reduced. Something had to change.

For our electric bill that went up (even more now with summer air conditioning), we unplugged. Think shutting the strips on the TV ‘s when not in use, unplugging the computers and printers when not is use, unplugging the kitchen appliances, and more. By doing this we have reduce our bill by about $15 a month. AARP has an article on lowering your electric bill during summer.

Previously, we have reduced our cable bill, by reducing it to basic TV service and internet. Now we add whatever paid service that works for us – and only one at a time. We have smart TV’s and can access programming through the internet apps that are free. We use our local library’s digital collection for free. Right now, we are using Sling TV for other channels. In total, we spend about $110 a month total, by reducing the cord. Hopefully, one day we can totally cut the cord!

We have also not renewed most magazine subscriptions and cancelled memberships. For our warehouse club, I had to go into our profile and uncheck automatic renewal. If you do this, remember to check that you are not being automatically being changed when you shouldn’t be.

Simplifying Buying When Not Needed

How many times have you gone out and made a purchase only to come home to find out that you already had the item? This used to be us.

Simplifying the kitchen is good thing makes what we need easier to locate when needed. Simplifying and organizing has been our mission. Now our kitchen cabinets and grouped together – one shelf for condiments, one for soups and other canned goods, one for pastas, etc. Kitchen cabinets a mess. Items put on any shelf and not grouped together.

Now it’s so much easier to see what is needed before going shopping and not may unnecessary purchases (all while saving money).

Simplifying One Times Use Items

Next, we are simplifying by getting iod of items the are one-time use items.

What items are in our kitchen that we only use for one purpose. These are taking up space and we can do without these. Think apple slicer, we can cut the apple with a knife. Think popsicle molds, how many times have I used them. I can only think of one time. We are working our way through the cabinets and drawers in our home. How many of these items do you have in your home?

Items are piling up and will be ready to donate soon.

Simplification – Duplicates Be Gone

Simplifying the kitchen is good thing and makes what we need easier to locate when needed. spring cleaning

During this stay at home time, we have begun getting rid of duplicates. Really, how many potato peelers can one kitchen need? Not to mention the hamburger flippers, ladles and more.

We have begun going through the process of cleaning out the kitchen cabinets and drawers. I can’t believe how much we have accumulated over the years. Maybe, its time to pretend we are moving and do a deep cleaning? Think about all the money we have wasted with buying these items! It’s time to think save money instead of buying another item.

Simplifying By Doing It Ourselves

We have made choices in our lives to do things ourselves and not pay for the service. It’s a personal choice that we are happy with.

With that in mind, I want to share with you what we personally don’t spend money or reduce our spending on in our household.

Our Home:

Yard work
Spring and fall yard clean up
Snow shoveling
Gutter cleaning
Power washing
Trash / recycle – would have to ay a trash hauler as our town doesn’t provide this service
Rain barrel – we collect rain water and use this to water the garden and plants
Compost Bin – our town has a goal to go waste free, so we are able to take our food waste to the town for compositing

By doing these things ourselves, we save money each and every month that we can use in a variety of ways (reduce debt, increase savings).

Simplifying Home Improvements

If you have followed my blog, you know that we do projects around our home all the time. We typically a yearly list to do.

With more time on our hands and being a homeowner, means there is always a project / improvement that needs to be done, some by us and others by professionals.

Our first project this year was to replace the grass between the road and sidewalk with plants. Delivery trucks parking on the sidewalk and the salt from the winter storms always made this grassy area a mess. Our hosta plants needed to be split, so this solved the problem. We removed the grass and placed weed block down, added the plants and completed it with mulch. No cost to us, just labor over two weekends.

Next, we starting to replace fence panels. We are still doing this ourselves, by replacing a panels or two when we have a few hours and the weather cooperates. We’ll do what we can and at a slow pace. It sounds easier than it is, because it’s not only replacing the panel, we need to breakdown and transport the old panel to the town’s transfer waste station.

As you know, home improvement projects and maintenance are easier to do now versus having a major emergency home improvement project later.