EPS 2 - Credit 101: Build It, Fix It, Protect It” (feat. Grace McLen)

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The best things in life are free, but you can get

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Welcome to the Pink Money

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Podcast.

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With your host, Jerry Williams. A podcast that's all about money from a gay perspective. Hey everybody, this is Jerry Williams and I'm your host for the Pink Money Podcast and today What we're here to do is, of course, look at everything from an LGBT perspective. And I'm really excited for today's podcast because we have your favorite financial advisor in mind, Grace McGlynn, joining us again. Yay! So that's really good news. And in this episode, what we're going to talk about is credit. And it's such a huge topic. There's a lot of moving parts to it. And I think everyone's gonna learn a lot because if you don't know how credit works, it can either help you or hurt you. So the more you know, I think the better off you're gonna be. So let's go ahead and dive right in because I think there's, like I said, a whole bunch to it. And I think for the most part, everybody knows that you have a credit history and a credit score, right? I don't think though that a lot of people know what makes up a credit score And what are the things that get reported or don't get reported? And there's a lot of aspects to that. And in a nutshell, your credit score is something that is essentially set up not for you, but by companies that are lending money to you. And then it looks at essentially how you're paying them back and gives you, again, a credit score, which can range from, Very low, three, fours, fives, all the way up to sevens, eight hundreds. And of course, the higher credit score you are, then the better rates you're going to get and the better lenders are going to offer credit to you more often. Simple and easy and get better rates. So let's go ahead and bring Grace into this discussion. Grace, you know, you've been doing this for over 20 some odd years. And I know that it's one of the most familiar topics that you probably discuss with a lot of your clients.

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It is. Everybody wants to know about how to get credit, how to keep good credit, what to do with their bad credit. So it's definitely something to consider all the time.

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How often would you say you have this kind of a conversation with people? Every day. Every day. All the time. I

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think it's one of the biggest things. Well, first of all, people don't always understand it. And we all know we need it. but we all don't take care of it. And I kind of think about, we all have those friends that borrow money all the time.

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And

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if you knew that they weren't going to pay you back, would you still give them money? No. So the same way with us, lenders don't want to give us money if we're not going to pay it back. So it's nice that they have the score and the history. I kind of wish we had that for our own friends to help us out, but it's a big deal. And it impacts so much, like you said, the lenders, whether they give you credit or whether they let you borrow money, what interest you pay. jobs deposits it just endless on what it impacts

SPEAKER_00 3:57

right and i think that one of the things that is a little bit of a mystery is because since we don't really have we don't really put anything towards it i mean we're not really contributing towards it in the sense that we are the ones that are voluntarily reporting it on our own people are reporting us to the bureaus so like when Equifax, TransUnion, and Experian, the three largest credit bureaus, when things get reported to them, companies that are doing business with them, then they're obligated to report your payment history, et cetera, to them, and then they keep the score. I think one of the best things that was ever done, in my opinion, with the credit bureaus is that they now, this has been many years, but they are obligated to report give you a free copy of your credit report every year. And there are certain obligations that they have to fulfill when, for example, you dispute something on your credit report. They have a certain time limit. In this case, it's just 30 days. They have 30 days to respond to it. And it could be 30 days to validate it or 30 days to remove it, especially if it's an error. And I think that occurs a lot. I

SPEAKER_01 5:09

think it does too. And having the Annualcreditreport.org is where you can get that free copy of your credit report once a year. It's important to get all three of them because they don't all report the same way. So you may buy something that shows up on one and not the other. But if you get all three of them, then you can see how your credit's looking. What you were talking about reporting any mistakes, I've had that myself where I paid something off and it's showing up later. When I went to get a background check for a job, it shows up and it had been paid off for five years. So having someone or having it where it's mandatory, they have to check it within a timeframe. That is huge.

SPEAKER_00 5:45

Right. I think in just a good practice, people should check your credit report at least once every year, at least. And if you didn't know it, you are entitled to get a free copy of your credit report every year off of annualcreditreport.com. And I think a lot of people think you got these other free services where you can get your score, you can see sort of, I think, a condensed version of your credit report. I don't know. I haven't used them all, so I'm not 100% familiar with how they operate, but I know that they exist.

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I don't use them either. There's a couple reasons why. One, because I don't want all the advertisements or the sales of my information that come with that because they have to make money, of course.

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Right.

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And then I'm not really sure about the accuracy of it all.

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True.

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And, of course, it often leads to those debt programs that we know can end up in a bad way versus the good that we think they're going to do.

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Right. And, you know, the scores themselves, again, in my opinion, a little bit of a mystery. I think everybody... should have a general idea of, again, where your score is. Because especially if you're trying to improve your credit, which most people are probably trying to do, or keep it high, then there are certain things that you can do which definitely will impact your credit score.

SPEAKER_01 7:05

Sure. So the biggest part is making the minimum payment on time. So no matter what happens, you want to make at least the minimum. Obviously, you want to make more. But if you miss the minimum payment, that's a huge ding. And since that's 35% of your credit score, That's a big chunk. That's the biggest part that people mess up.

SPEAKER_00 7:24

So the main things that are going into your credit score are just like you mentioned in terms of the biggest chunks of it. Because if you think of it as a pie, 360 degrees, then that pie is divided into the components that are the major things that make up your credit score. Like I said, on-time payments, paying your bills on time, every time, every month, that's at least 35%. And then you have the amount of credit that's used, your credit utilization, as it's called. So, for example, if you have a credit card with just, let's say, a $1,000 credit limit and you've used all of it, then you've used 100% of your credit. There's no wiggle room there. So you want to keep your credit utilization of that card, I would say, at least under 50%. Better is probably like 30%. I would

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agree.

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Yeah.

SPEAKER_00 8:16

Yeah, so very low. And when you use your card sparingly and for whatever purposes you need it for, even if, let's say, you did buy something for $1,000, and your goal then is to pay that down as quickly as possible. And if you're making just simply the minimum payments, that's going to take you forever.

SPEAKER_01 8:35

Oh,

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yes. Yeah. And it's going to

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cost a lot in interest.

SPEAKER_00 8:39

Right, exactly. So the credit utilization is about 30% of your score. And then your credit length, meaning the length of time you've had credit with your lenders. So anybody you've had a longer credit history with, let's say you have a Macy's card and you had that for 10 years, that's going to reflect better than a brand new credit card you just got. And because, again, there's no history there, even if you've made your payments on time, and let's say you've had it for six months, there's only six months of history there for someone to essentially judge you by.

SPEAKER_02 9:13

Right.

SPEAKER_00 9:14

So you really want to have a longer credit history with someone. And even if you don't use that card anymore, you really don't want to close that card unnecessarily just because, let's say, you don't really use it anymore. I don't know if you have cards like that, but, I mean, when I was younger, I just thought, well... I don't use this Macy's card anymore. I use this card because I get points with it or whatever. And, you know, you wouldn't probably think twice about just closing it, but then you don't really realize, because now I think that you get your score more often, you know, you can see it more frequently. Yeah. And so it's, it's I think more common where years and years ago, you really didn't know what it was and it wasn't as easy to obtain your score. Well, and then speaking of the score, so I don't think I don't want to forget about this because just popped into my mind. When you go to annualcreditreport.com, you don't get your score for free.

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That's right.

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So you have to actually pay for that. And I'm not sure what it is these days, but $15, $20, I don't know. I'm not sure either. Yeah. I just know it's not free.

SPEAKER_01 10:17

And it's not free, but I tell people all the time the score is not the most important factor. So if the score says one thing, but you don't know what your credit report is showing... Kind of pointless.

SPEAKER_00 10:27

So when someone pulls, do you pull the credit report with them or do you ask people to bring it in or how does that work?

SPEAKER_01 10:33

I usually ask them to bring it in only because when they go to the website, it's going to ask them questions, you know, like what street did you live on when you were five or whatever they are. And that takes a lot of time. So if they can just bring them in, it's easier for me.

SPEAKER_00 10:45

And then basically you just go over it with them and look at, Are these your accounts and are they familiar?

SPEAKER_01 10:51

And this is what I tell everybody. You want to look through everything and make sure it's accurate. So I've seen one person's credit score that had 20 different names. It happens. We get misspelled names all the time. Sometimes somebody puts a social security number that's the wrong name. I have one guy whose brother had his mother as his wife on the credit. It's just a mess. So you just want to make sure it's all okay. If your name, if you have 20 different names on there, it's not going to be that big a deal.

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Right, right.

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But if it starts showing somebody else's credit report, your social, that's a big deal. So you just want to look for accuracy.

SPEAKER_00 11:23

Right. And if you have a very common name like mine, you know, it's easy for someone, another Jerry Williams to potentially be on my credit history or like I was just reading that story, a story, and it was about your driver's license information being basically stolen. And if that's compromised, then they could take that information, open up a bank account or bank account, credit card, whatever, and then default on that. And then that's reflected on your credit report. And that obviously is going to hurt you. And unbeknownst to you, you go to apply for a credit card or whatever, and you get denied and you're thinking, well, why in the world would that be? And it could be something like that.

SPEAKER_01 12:03

And it's a nightmare. It takes so long to get that. proven that it wasn't you and to get it fixed. This is why we say check it

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frequently. And I do know as well that you can contact the credit bureaus if your identity has been stolen and let them know that you've been a victim of identity theft and they will basically lock your account down.

SPEAKER_01 12:23

That's right, you can. And you can do that with your credit cards or your credit reports anyway if you're thinking you're going to be traveling or you're not going to want credit. You can have different ways where they lock it down so that you would have to do something extra to get credit.

SPEAKER_00 12:36

And that's not anything that I haven't necessarily had my ID stolen that I'm aware of, but I know plenty of people that have.

SPEAKER_01 12:46

Oh, me too. I've never had it happen personally, but it's a nightmare what they go through to get it back to normal.

SPEAKER_00 12:51

I think my sister had, or she was a victim of identity theft twice.

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Really?

SPEAKER_00 12:56

Yeah, just oddly. And she doesn't really have a common name either. God only knows how they got it, but I remember hearing her mention it a couple times. I think it was a very close kind of back-to-back situation as well. I don't know why, again. But, yeah, it's a pain. It's miserable. Total, total pain. Yeah. And then there's all kinds of unscrupulous people out there, and you never, never, never know what they're going to do. Yeah, totally. So, again, looking at your credit report and your history is, I think, singularly important. So if you were advising somebody who had, let's say – bad credit, then what would you advise them?

SPEAKER_01 13:34

And that's usually the question I get. That one and I have no credit because we all know having no credit is almost as bad as having bad credit. It's kind of like when you first start a job, they want experience, but you can't get experience without the job and it's just a circle.

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So

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if you already have credit cards that are in default and they often will offer you a settlement where you can pay a less amount and just write it off, You can do that, and it's going to lower the amount of debt you owe, but it's not necessarily going to change your credit score much. So I usually tell people that minimum payment on time and getting any accounts that are still valid paid off is really the biggest deal. Most of the people that don't have any credit, or even if you have bad, you need to rebuild and balance it with good monthly payments. It's not going to happen tomorrow. It's probably going to take at least a year before you see any real improvements. But you can do that through secured credit cards.

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So

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secure credit cards are a way that you basically are borrowing from your own money. It sounds kind of silly, but it's a purpose that we need. So you would give maybe $300, $400 to a company. They give you a credit card, and then you borrow from your own money. The benefit to you is that every month is showing when you make your payment, that's one more ticky mark on the positive side. Once you start getting that going long enough, it can offset the bad. Like I said, it is not going to happen quick. There's no miracle there.

SPEAKER_00 14:52

Well, and secured debt is going to reflect better on your credit report as well versus unsecured debt, meaning a car that is secured by the bank loan, meaning if you default on the bank loan, you default on your car payments, then the bank has the right to come repossess the vehicle and sell the vehicle and then pay off that loan. If you default on a credit card, they can't come repossess the credit card. And there's... They just essentially will write that off. And I think the point that you make is a really good one because it reminded me that if you default on your credit card, let's say you missed a month and maybe then it goes into two months. And this could be very common because of the pandemic, you know, that you had to put food on your table and your income has been erased. Maybe you were a bartender or something like that and you haven't been able to earn the kind of money that you did before. So you find yourself behind on your credit cards. I think what's really most important is contacting the lender, whoever you owe the money to, and you want to explain your situation to them and get them to work with you so that, let's say, they could defer a couple payments or lower the payments to a very minimal level. And so that really doesn't hurt you as bad.

SPEAKER_01 16:08

Yeah. Yeah. But it's definitely worth a try. It's the first thing you want to do if you're going to miss that payment. Before you miss it, not after.

SPEAKER_00 16:32

And when that credit card bill starts coming in the mail and you know you can't pay it, the worst thing that you can do is not open that

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letter. It's so much easier to not look at it, but it doesn't make it go away.

SPEAKER_00 16:46

No. And in that sense, too, I mean, if somebody does have that kind of fear and they're kind of in denial about it, what would you tell them to do?

SPEAKER_01 16:56

Well, we all have to man up because it is very scary. And I've been there before where I don't want to look at the mail either, but pull up the credit report, get all three of them. And what do they say about how to eat an elephant, right? One bite at a time. So just do it, start looking. We take one account, we figure it out, take the next account. It's not going to get any easier. So the longer you delay it, just going to get worse. Today's as easy as it's going to get for you. So start out today and step by step.

SPEAKER_00 17:24

And I think the other thing that, if you're dealing with, again, you're in default, you've missed something, the people that are on the customer service front end, they're not your enemy. They really aren't. You probably feel like they are because you owe money and you don't really want to kind of have to face the music. But I think the best thing you can do is work with them and be honest with them about your situation because I'm sure there's all kinds of tools available that they can use or have at their disposal. And if it is that they have to, let's say, get authorization or something to sign off on a plan that you guys have in place, that's okay. You're going to feel better knowing that you've worked with your lenders. And if you stay in communication with them, things are going to work out a lot better versus they have to hound you for the money. And then you get into that cycle where you don't want to answer the

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phone,

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then that's not going to go away and that's going to get worse.

SPEAKER_01 18:20

That's so true. And once again, it's going to just continue to compound. So you're going to need credit at some point. So if you have bad credit, in the future, nobody's going to lend you money. That's not even the worst of it. It could impact your job. I just talked to a girl the other day that wasn't able to get a job at a call center because her credit was bad.

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So

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how annoying is that? You can't even make money because your credit's bad. You go get a new phone or even electric bill. Now you have a deposit. Your insurance rates go up. It impacts everything. So it's a nightmare, but you definitely want to, if you're in a bad way, you have to open the mail, you have to get it going.

SPEAKER_00 18:53

Yeah. And let's say that you did default on that credit card or a lot of times it's a medical bills,

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right?

SPEAKER_00 19:01

And maybe you did go and you got treated and then you realized this is a $10,000 bill and I can't afford to pay it. I mean, I'll give you a real example of a situation that occurred that I knew this person that one day they were sitting in a, um, rocking chair and their back totally gave out, could not get out of the chair, sat there for almost a half a day in that chair. Cause they literally could not get out of it. Had not had someone not come over meant to look, look in on them. Yeah. Probably would have ended up there forever, but nevertheless, they went to the hospital, ended up with like this big, like goose egg on the spine that was pressing on it. that caused the inability to, basically was paralyzed from the waist down. So surgeries, the whole nine yards, $90,000 of hospital bills, no insurance, none. So obviously, unless you are of substantial means, you're not gonna be able to pay that. What ended up happening was they were able to work with the hospital And there were charities that picked up that tab.

SPEAKER_01 20:15

How nice is that?

SPEAKER_00 20:16

Yes. And I know of another instance, not to get too far off the topic, where a situation occurred. And this was with a gay bashing that happened where this guy got hit over the head, got totally knocked out.

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Ouch.

SPEAKER_00 20:31

Yeah. In a parking lot late at night, taken to the hospital really against his will. And then he was told, if you don't go to the hospital voluntarily, then you're going to be arrested. Yeah, oddly. Those were the options? Those were the options. He had to go. Went to the hospital, which was a good thing, right? You go to the hospital, you get checked out, x-rayed, whole nine yards. And long story short, I think it was close to $15,000 of emergency room, hospital, I mean, ambulance, the whole nine yards. And ultimately, they had a victimization fund that picked up that entire tab.

SPEAKER_01 21:12

What a great benefit that they even have those. It's sad that we need them, but what an awesome thing to help out.

SPEAKER_00 21:17

Well, if it would have been the reverse, adding insult to injury, not only were you knocked out, let's say, and a victim of a hate crime, but you've got now $15,000 worth of debt that through no fault of your own, now you're saddled with paying this off. So it was really a blessing. But I don't think a lot of people know that some of those options exist.

SPEAKER_01 21:36

I don't think they do either.

SPEAKER_00 21:37

And I think that, again... especially when you're dealing with like a hospital, you really need to work with the billing department and explain your situation. I have no money.

SPEAKER_02 21:47

Right.

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And there may be options that you just really don't know about. And there are a lot of charitable institutions or people who will pony up that kind of money. And we all seen GoFundMes for people that are in dire need, et cetera, et cetera. Right. I

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think like you say, Colleen, Yes. The billing department is expecting this.

SPEAKER_00 22:04

Right. Of course. There's not

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a whole lot of people that are paying all the bills without insurance. So contacting them and finding what resources they have, that's absolutely everyone key.

SPEAKER_00 22:13

And you don't ask, you don't get.

SPEAKER_01 22:14

That's true.

SPEAKER_00 22:15

And the other thing that kind of dawned on me, we were talking about credit, et cetera, and defaulting on things. Let's move on to the topic of, let's say you're starting to get hounded by creditors. So if, Do you have people that have come up to you and say, Hey, you know, I've got past due bill, you know, outstanding debts and I'm being creditors are calling me or debt collection agencies are calling me. How do you respond to that situation?

SPEAKER_01 22:42

So I don't have them any, any longer where people are threatening for a while there, the debt collectors would be completely threatening you and very intimidating. And I don't know if it's because of the laws that have made that a lot better, but yeah, With each of them, I tell them when we pull up the credit report, then we can contact the company directly. So, you know, sometimes when you... Like let's say you quit making payments on something and after, what is it, 180 days it goes into collections and then they often sell it to somebody else.

SPEAKER_00 23:09

A maker.

SPEAKER_01 23:09

So another company buys it for a discount. Right. They're hounding you and then this can happen several different times. So finding back the original person is often very difficult. But calling whoever owns the debt at the end is the one to make the contact with.

SPEAKER_00 23:24

And that's a good point because when you have something that's a ding on your credit report, it's not going to go away on its own. It's going to stay there. Positive things will stay there forever. And negative things have a limited life. So for all intents and purposes, that will stay on your credit report for seven years. Like bankruptcy possibly will stay for 10. And that's generally like a chapter seven where you do a total liquidation of all your assets. A chapter 13 or chapter 11 will only stay about seven years. So that's because you typically are in a negotiation with your creditors and you're on a repayment plan. And so you're obligated to pay them back something. And that's, I think, the reason that it's on there for fewer years than Chapter 7, where you aren't making any restitution. You're just wiping the slate clean and starting over. But it's still a huge slap on the wrist to you.

SPEAKER_01 24:20

It is. It makes sense, though, that one would be a little bit more lenient. And I think IRS and student loans are another one that can be a... on there forever. So, you know, with student loans, whenever you stop college, you have the six months before you go into default. That's right. And I think a lot of people forget.

SPEAKER_00 24:37

It's

SPEAKER_01 24:38

not even that they don't mean to pay them. They just forget. So if you're ending school, make sure you put that on the calendar so you don't go past that six months.

SPEAKER_00 24:45

Right. And speaking of student loans too, you know, again, contacting the lender and explaining I'm out of work. I have no money, whatever the situation is. I can't afford the payments. And they have repayment plans that are income-based, or they can put you in forbearance, meaning they put your payments basically on hold. During the pandemic, we know that they've stopped student loan payments throughout the end of the year. And that possibly even could be reinstituted to maybe another timeline. But I mean, that just means that the payments, you're not obligated to make those payments and they're not going to report it negatively to the credit bureaus that doesn't mean again the debt's going to go away it doesn't mean the interest doesn't stop but it just means though that again you're not going to fall behind through no fault of your own if due to the pandemic you found yourself out of work with no money so the other thing that i think you know a lot of people don't know as well is when you have a credit when you have a debt collector who buys that debt from, let's say you had the Macy's card and you defaulted on it. Then some, a maker buys that from Macy's and let's say that it's 27 cents on the dollar that they buy it for. They try to get, you know, whatever they can from you. But again, Macy's no longer owns that debt. They wrote it off. It's off their books. They don't have anything to do with it anymore. They really essentially don't care. And this new company then is going to try to get whatever they can from you. And they may try to set you up on payment plan or they may call you and hound you. And now I don't know if you know that they can text you.

SPEAKER_01 26:21

No, I didn't

SPEAKER_00 26:23

know that. Yes, they can text you. So they can use whatever devices that are available to them to reach you. And I know they've done lots of shady things like contact people's neighbors and all kinds of craziness trying to essentially what they call skip tracing, find you. And especially if you defaulted on an auto loan, they will do anything to find you and get that car back.

SPEAKER_01 26:47

They definitely will with autos.

SPEAKER_00 26:48

Yeah. So the point I'm making, though, is when you're dealing with a collection agency, you're not dealing with the original company. Plus, the thing that I'm not sure that everybody knows is you have, let's say, if you defaulted on that Macy's, you have a negative credit history now on your credit report with Macy's that says it's charged off. So that's going to be on their negative leave for seven years. And then you're going to have another credit history added for the collection agency. And that starts a new seven-year cycle, potentially, with them. So you could pay it off. And I think what you want to try to do is if you do have the means, and let's say that ABC Collection calls you, I think what you want to do is try to negotiate a settlement with them that's reasonable. Certainly, if they say, how much can you afford to pay? You don't want to say, if it's, let's say, $500, I could pay X. I think you always want to, especially if you're not a good negotiator, if you're embarrassed about the whole situation, you need to start very low. Whatever's reasonable for you. And if it's $100, that's really essentially all you can afford to pay. You better start there. You know, $100 is all I got. I can't go higher than that, period. Because again, from them, they bought 27 cents on the dollar. If they get $100 from you, they've still made money. They're not really out a whole lot. And so essentially then, once you've reached a negotiation point, negotiated something with them and you're able to pay it off, the best thing you can do also and try to get them to remove this from your credit report, that, hey, if I pay this and I agree to pay this on time with you, Will you remove this from my credit report? And if they say yes or no, hopefully they say yes, you need to get that in writing. You cannot take anybody, unfortunately, at their word. I always hate to say that, but you really have to be adamant that I need to see this all in writing. The payment plan or what we've just agreed and that you will remove this from my credit report once I pay it off. That's what I suggest.

SPEAKER_01 28:59

I think the same exact thing. Like you said, that doesn't mean they have to. They don't have to remove it. But having it right in and asking is definitely worth doing.

SPEAKER_00 29:09

Yeah, because really it's no skin off their teeth. No. And if you don't

SPEAKER_01 29:12

ask, they're not going to volunteer to remove it. Don't ask, you don't get. They don't necessarily have to, but it's definitely worth asking.

SPEAKER_00 29:19

Yeah, and I really think, again, because you have the ability. You're in the driver's seat. they have to get that money for you or they will not make anything off of this account in order to make this work. They got to get money from you. And the nicer that they are, what do you, what is that? Um, you drag more bees with honey than vinegar kind of thing. So yeah, the nicer they should be to you, even though a lot of them are kind of mean.

SPEAKER_01 29:43

They are, but I think they feel like they have to be to get people to pay attention.

SPEAKER_00 29:47

Yeah. Sometimes, you know, it's the carrot or the stick and you know, with me, I'm much, much, much more likely to respond with the carrot than the stick.

SPEAKER_01 29:58

I am as well. And the other thing is you don't have to be afraid. You know, you're on a phone. So if they're not being nice, you would hang up and call somebody else.

SPEAKER_00 30:05

And they're not coming to your house. They're not coming to repossess your car. You know, they're not going to subject you to garnishment of wages or anything unless they get a judgment against you. And the judge agrees to that. But essentially, even if the judgment does go through, like they successfully sued you, then again, the second part of that is they have to collect. And that's a challenge in and of itself. And over $500, let's say Macy's bill, they're not going to do that. But the way that they're going to hurt you is to keep it on your credit report. So what other horror stories have you heard, Grace, in your experience with people and their credit?

SPEAKER_01 30:44

I feel like credit is the biggest horror stories ever. So I have a lot where people quit pain and then they just don't open the mail like you talked about. And I don't think people realize how devastating that is to your overall score. And like I said, today is as easy as it gets. If that seven year starts today, we've only got seven years. If we wait till two years, now we've got nine years. So when you can't get a job because of your credit or a decent paying job, maybe if you have different bills that you have to pay because your credit wasn't great, or if you're spending more on a loan than somebody with good credit, all of these things are really frustrating and they're avoidable.

SPEAKER_00 31:16

So let's say my credit score is low 600s and I want to get it to go up. What would you suggest I do?

SPEAKER_01 31:25

Make minimum payments on time. So I had a friend of mine who had bad credit, mostly because he didn't pay things like his phone bill. He didn't really have much credit, but he didn't pay the few bills he had. So he got two secure credit cards. Make minimum payments on time. And then about every month, he's sending me reports from Credit Karma, which, like I said, I don't really use. But he would send me reports that it was going up. So about a year later, his score was up. So what you need to do is offset all of the negatives. So if that means you get a new secure credit card, you go buy gas. You have to buy gas anyway. We're not talking TVs. You don't go buy new TVs. You're not going out to eat on this. You're just buying the basics of what you would spend anyway. Go home and make a payment. You don't have to carry that debt through the next month. Pay it off. Every month you're showing positive payments. And like I said, in about a year you'll start seeing a better improvement. Don't expect it overnight.

SPEAKER_00 32:16

Right. And, you know, when I experience this with people too, what I would always say is step one is to review your credit report. Go to annualcreditreport.com. You're entitled to a free credit report every year from TransUnion, Equifax, and Experian. So number one, get a copy of your credit report and go over it. And... If you find a mistake on there, you dispute it right away. And you can dispute it online or you can write a letter. And again, you want to keep track of this 30-day clock yourself so that you follow up with them if they haven't responded to you. Because again, they have a limited time to respond back to you. That's step one. Then step two is once you've disputed things and they either remained or gone away, right? Ideally, they've gone away, but let's say that something sticks there, and you need then to work with them to get that off or to resolve it if it's open. And it depends on how bad you want to improve your credit report, but if you want your credit score to go up, you're going to have to deal with that. If, let's say, it's something that you're not willing to tackle and you're just like, let sleeping dogs lie, Fine. It's going to stay there for seven years until that seven-year clock goes by, and then it'll automatically fall off. In the meantime, what you can do, just like you said, get a secured credit card. The other thing that you can also do, two things you can do in my experience. You can get a secured loan, and that's almost exactly like this secured credit card idea. Contact your bank. Let's say that they will give you a secured loan for maybe $1,500. So the benefit is that you have a loan that's available to you. Your cash, your $1,500, you have that on deposit with the bank. They're paying you interest on that, not a lot, but a little, and then it's secured. And at that point, should you default, let's say, on that loan, obviously the bank doesn't have anything to lose because they have your $1,500 on deposit, and they will just pay that off. But that will also help to build up a credit history with that institution, and that will get reported to your credit bureau. So that's a good thing you can do. And if, let's say, you have your mom, dad, brother, sister, whomever, your significant other, your boyfriend, girlfriend, you can piggyback on their credit as well. And what that means is if they offered you to be an authorized user on their credit card, then that gets reported to your bureau as well. So you have that credit card and that line of credit that's open to you and you can use it. Hopefully you don't abuse it, but it's open to you. And that will also really boost your score up if they've got good credit and that may help you.

SPEAKER_01 35:14

Yeah, as long as they're making payments, that definitely shows positive. So if somebody comes to you and wants to be an authorized user on yours, make sure you Pay attention because you don't want to just help somebody out who will mess up your credit

SPEAKER_00 35:26

in reverse of that. Yes, that's like co-signing on a loan for somebody. Not a good idea generally. Really not a good idea.

SPEAKER_01 35:33

Maybe if you can see the credit report first.

SPEAKER_00 35:35

Yeah, yeah. Well, I think we've covered a whole lot of things. Hopefully this was helpful to a lot of people. Any last tips from you, Grace, on credit reports or anything else?

SPEAKER_01 35:45

I really think that we've covered them. You check your credit report. You mentioned the website annualcreditreport.com. Get all three of the credit bureaus because they report differently and start with the basics. Make minimum payments on time, every time. And if something's going to happen, contact your lender.

SPEAKER_00 36:01

Right. And if you can do more than the minimum, you should definitely be paying over and above that because that's going to help you pay it off more quickly. And there are such debt repayment plans as like a debt snowball, et cetera. And that's something that we can go into a little bit later because there are strategies to help pay off that debt. faster than you know just doing the minimum payments because like i said that's really not going to do the trick

SPEAKER_01 36:26

forever plan

SPEAKER_00 36:29

exactly so um that's pretty much it from us today thank you again grace for coming in i always love having you my

SPEAKER_01 36:36

pleasure i'm glad to be here

SPEAKER_00 36:37

yeah absolutely well we'll be hearing more of grace as well in the future and Definitely keep your eyes and ears open for our social media pages and our webpages that are about to drop. And reach out to me, and we will definitely do everything we can to help you improve your financial footing every day. Take care.