April 30, 2018 by Administrator
One of the most popular questions The Money Coach Lynnette Khalfani-Cox gets asked is how to improve one’s credit score. While inquirers may be hoping for a quick fix, establishing and maintaining good credit requires thoughtful action, or as Lynnette likes to call it, a game plan.
“It’s incumbent upon us to learn how to manage credit and debt wisely,” she said. In her New York Times bestseller, Zero Debt: The Ultimate Guide to Financial Freedom, she writes: “Excessive debt is an unnecessary weight that, left unchecked, just gets harder and harder to bear. Debt holds you back from living the life you want to live and doing the things you truly want to do. Debt destroys your confidence in yourself and your ability to make smart financial choices.” The book offers a 30-day plan to jumpstart your financial health.
Even though Lynnette was once a financial journalist and is now debt free, she had to climb her way out of $100,000 in credit card debt – much of which she created while in college. She faced a car repossession, chargeoffs, collection accounts, late payments and low credit scores before taking three years to “make it to the other side.” Once there, her lifestyle changes have kept her debt free for more than a decade.
Now, she shares her success and practical financial tips with thousands through her website, askthemoneycoach.com, media appearances and workshops including dfree® conferences. She said she openly shares the nasty details of her debt so that others won’t be ashamed of their financial mistakes.
“I also want you to know that you’re not alone in your debt woes and that no matter how bad it seems, there is always a way out,” she writes. “I also reveal my story because I want you to take an honest look at your own spending patterns.” Lynnette says her experience has shown that most debtors fall into one of two categories: those who overspend and are poor money managers or those who have suffered from one or more of the “Dreaded Ds:” downsizing, divorce, death in the family of the main breadwinner or disease. In any case, it’s possible to turn things around but Lynnette calls for active vigilance.
“Who’s going to care more about your financial and your credit health and your overall economic picture than you do? Nobody,” she recently said during a USA Today interview regarding the 2017 Equifax data breach.
Stay vigilant because the Equifax breach, along with others where hackers stole vital information such as social security numbers, has made more than half of all Americans victims of identity theft. Even if the hackers haven’t used the information yet, they always can. So, if you haven’t yet, one of the first things you need to do to protect yourself and your credit is to respond to the breach, Lynnette advises.
Equifax, which joins Experian and Transunion as one of the three major U.S. credit bureaus, has set up a website with instructions for finding out if your data was compromised and what to do about it: https://www.equifaxsecurity2017.com/. Lynnette advises everyone, not just those compromised, to take advantage of the one-year free credit protection services. But she says there are other methods that are also available for free if you’re a victim, including adding a credit alert and/or a credit freeze to your report.
“Monitor your bank and credit statements. Make sure there are no charges you haven’t authorized,” Lynnette told USA Today. “Actively monitor your credit all of the time, month after month on all three credit bureaus.”
Although everyone should get their annual, free credit reports from the three bureaus (available from websites like www.annualcreditreport.com) and monitor their credit scores (CreditSesame.com), Lynnette advises paying the nominal fees or finding out how else you may qualify for free reports so that you can check your reports and scores more often.
She said she knows people are concerned when they have to pay monitoring fees, but most are worth it. She also said that many states offer protected groups free credit reports such as: people on government assistance; senior citizens; people age 16 or younger; members of the military; people who are victims of identity theft; and, spouses and dependents of identity theft victims. Seven states even offer free credit freezes including: Colorado, Indiana, Maine, New Jersey, New York, North Carolina and South Carolina. Another important tip related to the breach is to file your taxes early in 2018, before crooks have a chance to use your identity to try and steal your refund.
If you’re trying to rebuild or establish a credit profile, Lynnette says one of the best things you can do is get a secured credit card, use it every month and pay the bills on time. A secured credit card is one where your limit is only as high as the cash deposit you put on account with a bank or credit card issuer in order to open a secured card. The great advantage is that the positive activity is reported to the credit bureaus.
“You can also use a technique called piggy-backing, where you get added as an authorized user or co-signer on someone else’s credit,” Lynnette said. “Of course, make sure they have good credit. Their good payment
activity can help to boost your credit rating.” Ultimately, “there is a pathway to perfect credit” but you have to take it step by step and learn more about your finances, Lynnette says.
“Can you picture the day when all your credit card statements show zero balances?” Lynnette asks. “It can and will happen, sooner than you think, if you lay the groundwork for your financial success.”