Let’s all give ourselves more credit. We work hard, are stretching our money to get by and still barely making it. There is a way to keep more of your own money by paying less for everything. This comes with something that sounds like a class we all wanted to skip in school. CREDIT SCORE. Don’t run away. We’ve got you and will make this easy.
"Building credit is not just about numbers on a report; it's about building a life of financial empowerment and freedom." - Patrice Washington
Opportunities: Increasing your credit score unlocks the door to more than just paying less on your credit card and car. Having a good score opens the door to bigger life-changing opportunities like buying a house or starting a business. Stay right here for step by step direction to help you build your credit no matter where you are starting from. So, let's dive in and discover how you can take control of your credit instead of letting it control you.
What is Credit: First things first, let's get comfortable with a system and words that are made to be scary. Most people are confused, and it keeps them paying more. Do most businesses want you to pay more? Yes! We are breaking this down so that you have the power to keep more of your own money. Think of a credit score like your elementary school report card. The banks do! If you have an A+ you get to pay the lowest payment. If you have an C, D or E you pay more. To make it extra confusing they turn those into numbers like 640 and 780. Every bank attaches those numbers to a price (rate) and they don’t share that with you until you apply for the loan. How can you even shop around? Ever notice the newspaper and website ads are only for the best rate? That’s just for the people with A+ credit, even though most of us don’t have perfect credit. So how can we get you there?
Steps to Build Your Credit
Surprise! There is no magic bullet, and yes, they keep it confusing. Here are a few of our tips that could make a real difference.
🆘 Ask for Help: There are people who help those of us that need to keep more of our money build credit. It’s their job. The best financial counselors work at nonprofits. Really look at who you talk to carefully. Make sure it is a nonprofit. There are bad actors out there that will charge you money and worse. Use The Opportunity Finder to locate a nonprofit that will talk to you about this over the phone or in person.
💳 Opening a Credit Account: If you have no credit at all, a financial counselor will encourage you to open an account. Other times a financial counselor will tell you to stop using an account and to pay the loan down. If you have never had a loan of any kind, consider the option of opening an account at a Community Development Financial Institution (CDFI). CDFIs exist to help people. That’s very different than just making money off of you. You can find a local CDFI to help you in The Opportunity Finder. If your financial counselor recommends it, you can also explore a secured credit card or a credit building loan.
⏰ Pay Your Bills On Time: That’s easier said than done when stretching money as far as it can go. Many people are even paying for groceries on credit cards just to survive. We get it and you. So how do you pay things on-time when you can’t? Pick up the phone. Crazy as it sounds, waiting for a collection call is the worst thing you can do. Call them instead. If you call the credit card company or bank they may not count it as a late payment. Almost all credit unions are willing to push the payment date. As long as you are willing to ask for help to extend the date, you are likely to be supported. If you are having trouble with utility bills, use The Opportunity Finder to locate a nonprofit that will pay for your utilities for a month or two. If you are paying too much on your credit cards and can’t make the payment, use The Opportunity Finder and click on “getting rid of credit card debt.”
🍰 Don’t Eat All the Cake: A fancy term that is confusing, “credit utilization” just means don’t eat all the cake. Think of the amount you are “allowed” to charge (available credit) on your credit cards as the cake. If you eat all the cake, you have no available cake left. The same is true for your available credit. If a bank or credit union gives you a credit card with a $1000 limit, don’t use all $1000. Keep your “credit utilization” below 30% to increase your credit score. On that $1,000 credit card, don’t keep more than $300 on the balance. Using all the credit gives the impression that you're juggling too much. If you are using more than 30% now and can’t pay it down, use The Opportunity Finder and click on “getting rid of credit card debt.”
💎 Watch It Like the Most Valuable Thing You Own: This is a good way to think about it. This one thing determines how much you pay for everything. A higher credit score can mean you pay less than half of your current car payment. Imagine what you could do by keeping all the money! Your financial counselor can teach you to read your credit report. If you like sports, it has a lot of similarities to keeping score at a game. Just like sports you can flag a play. You have the opportunity to tell the people that decide if you should pay more that they got something wrong. Get a free copy of your credit report from the major credit bureaus (Equifax, Experian, and TransUnion) once a year and look for their mistakes. You can also use online services that offer real-time credit monitoring and alerts to keep you in the loop about changes in your credit profile.
⏳Be Patient and Stay Positive: Last but not least, building credit is like growing a garden or learning a new sport – it takes time, patience, and a positive mindset. Miracles don’t happen overnight, so set realistic expectations. Focus on what you do have control over and ask for help. You have nothing to be ashamed of and no reason not to ask for help.
By giving yourself more credit, you own your future. Believe you can do it. Ask for help and don’t give up. You deserve to keep more of your own money.