Credit Management

Your Financial Health

Do you ever wonder how your financial pictures stacks up? Are you on track to meet your goals? What do you need to still do? These and other questions are always on the many people’s minds.

I have discussed the importance of having an emergency savings, a budget to know where your money is going, great credit /score to have the best interest rates when you need to borrow and minimal high interest debt. Check out some of my past emails for more information on these topics.

This is a great article Six Numbers Reveal the State of Your Financial Health. How well do your finances compare to these six areas? All are important areas that should be goals for you to accomplish with your finances.

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.

Are You Going To Be A Victim of Fraud?

It’s said that everyone will be a victim of fraud at least once it their lifetime. Yikes!

What steps are you taking to protect yourself? While you can’t protect yourself 100%, you can take steps to lessen your chances or to catch it as fast as possible. Don’t be an easy target.

Here are a few tips that we do in our household:

First, your mailbox. Is your mail sitting in there all day or longer? Do you put your outgoing mail in there with the flag up for? All of these are easy targets to get your personal information. In our house, we take all outgoing mail to the Post Office. We pick up our incoming mail daily. Less time for someone to take our bank or credit card statement with our information.

Next is your car. Yes, you know your should lock it, but do you? If you do, what are you leaving inside your car? I just watched a video of people going to the gym and not carrying anything. To me, that means they left their purse / wallet in their car. Depending on the location, this can be an easy target for theft. Are you shopping and putting your packages in the car and going to another store? Leaving your car unlocked or the window partial open can give someone easy access to your belongings.

What about your home? Do you lock your home? What do you toss out / recycle? Think about your documents – can someone steal your identity by taking your trash. We shred everything and you should too. We also installed cameras to monitor our home. What about your computer / cell phones? What activities are you doing on them? Are you always connected to a secure network? Never do tasks such as viewing or paying bills when you are on pubic wifi. Set up two factor authentication for your accounts. Do each of your online accounts have there own user ID and password? When was the last time you changed your passwords? Monitor your bank and credit card accounts at least weekly to look for suspicious activity. Monitor your credit report / score to anything suspicious. Remember, the sooner you catch it, the less they can take.

To monitor your credit report, sign up for my newsletter at www.JillRussoFoster.com. In addition to the newsletter, subscribers will be given a reminder email to view their credit report three times per year for free and it won’t hurt your credit score.

Understand Your Credit

Let’s talk about where your credit is today. Those of you on my newsletter list should have recently pulled your January credit report. What are you hoping to accomplish? Do you want better credit? Do you want to be able to get financing when you need it at a reasonable interest rate? You can do this and it is possible. If your credit isn’t where you want it to be, you can change it. There’s no magic want and it can’t be done overnight (and you can pay someone to improve your score), but you can see improvements in a relatively short amount of tim choices e.

Here are some credit score tips:

Always pay at your bills on time. If you don’t have the money to pay your bill when it’s due, make at least the minimum payment required, so as not to be late. If it’s the timing that is an issue, change the due date. Many companies will do this very easily.
Pay down your debt. Reduce the total amount your owe on credit. Make a plan to pay it down and stick to it.
Watch your spending. If you can’t afford something, determine is it a need or a want. Needs are must have such as food, clothing, shelter. Wants are your desires, you can live without but would be really nice to have, but maybe you need to set a goal to get that want in the future.

All this over time will improve your credit and thereore credit score. The thing to remember is the newer credit counts more than item from the past. So there is light at the end of the tunnel.

Are You Part of the Equifax Breach?

By now you should have heard about the Equifax credit breach. About 1.5 million people may have been exposed in just this breach. Are you one of them? Credit Report Shock

First, if you are not sure, check to see if you were exposed. Click here to check.

Then follow the instructions to submit your claim if you were exposed. There are choices to make when you submit your claim, so take you time and read everything before making your choices.

Hopefully, you were not exposed, but if you were you need to act fast to submit your claim.

Your Credit Report

In my last post, I suggested that you consider freezing your credit. Another option would be credit monitoring. I personally am not a fan of paying for a service that you can do yourself for free. This is how you do this yourself.

You can review your credit three times per year for FREE! The Credit Card Act of 2010 lets you have a free credit report from each of the three credit reporting agencies once every 365 days. I suggest that instead of you accessing your credit report once a year, that you access your credit report three separate times in a year and do this yourself.

We make that easy for you. If you subscribe to this newsletter, Money Choices (www.JillRussoFoster.com) you will receive a reminder email three times per year to access your credit report. This will not be posted on social media, you will have to subscribe to Money Choices to get this reminder. Do this today, as your next reminder is coming in a few weeks. You can then see what is happening on your credit report and catch any suspicious activity. Sign up today!

Have You Done This Yet?

What are you waiting for?

With the EquiFax breach and so many more, this is what you should do. Jean Chatsky’s tips for freezing your credit. Do this today!

Sing up for my newsletter, Money Choices and you will receive reminders three times per year to order your free credit report.

Think you have bad credit

You may think you have bad credit, but you can change that by being informed. Information is the key to understanding what to do and what not to do. I truly believe that you control your own financial destiny.

To start, make a promise to be more informed – read more credible information, understand what is considered a good credit score and more. Learn this information and take steps each and every week to improve your credit score from where you are now. Make a plan!

If you credit is less than you desire, start by reading articles on my website, read this report from a survey that US New and World Report did with lots of helpful information that you may not be aware of. There is more information out there, but make sure it’s from a reputable source. Tomorrow, we’ll talk about your options.