Hello everyone and thank you for tuning into Ask Abby, our live show where we answer all of your questions about credit, debt and your finances. Today, we are diving into our series on CREDIT SCORES. We are going to start at the basics and really talk about everything there is to know about your credit score, how to improve it, and what to do if your credit score is somewhere in the 3-4-500 range and you’d like to get out of there.
Before we dive in, please take a moment to like and share this video so that more people can get some financial tips, especially, during these crazy times when the economy is still fluctuating and your financial circumstances aren’t super certain.
So, let’s talk about credit scores. First things first, if you have heard of a credit score and you’re not really sure what it’s all about or how it affects your finances, you have to watch this video: https://www.facebook.com/creditanddebt.org/videos/297509481376175/
It breaks down exactly what a credit score is, and what affects your score. It’s 2 minutes long and superrr informative! So if you’re like, look I have heard of this credit score thing but I really have no idea what it is, if I have one, or how it impacts me check that video out and then also be sure to ask me questions along the way!
If you have a credit score that’s in the 3-4-500 range, you’re probably in one of two boats:
One: you faced a challenge something happened along the way and you feel like you may be in a hole in which you can’t climb out But you really want to work towards improving it if you only knew how…
Two: you don’t really care anymore and you aren’t actively monitoring or working towards an improved score, and your mindset for the whole thing is something like ignorance is bliss right? You know your credit isn’t great and whatever changes are happening might be negative or whatever else you don’t know about your credit score – what you don’t know can’t hurt you?
Well for those of you who are in boat #1 and either want to know how or are actively working towards improvement, that’s great. I’ll have a show for you next week and here’s a great resourceful article with some tips and tricks for improving your score. So read that and please let me know what questions you have.
Those of you in boat #2 don’t tune out! This show is for you and I’m going to spend the rest of this episode doing my best to convince you that your credit score is your important friend and you’re better off treating it that way rather than ignoring it like another stress factor in your life. As I talk through some of this stuff, feel free to comment, whether you agree or disagree, or ask questions. I especially want to hear from you if you disagree, I want to know your perspective, so please share your thoughts.
So why should you care about your credit score? Well #1 is to use credit. Your credit impacts many different areas of your life that you may not be aware. Let’s say you have no intention of buying a car or a house anytime soon, so why do you need to care about or work on your credit score?
- You need credit to purchase a phone,rent an apartment or even get insurance.
- Prepaid cells are one of the few ways to independently purchase a cell plan. The major carriers offer plans This means though, that you’ll have to pay for your phone outright.
- You’ll need a deposit if you have no credit history. They vary, but it could be several hundreds $$
- Renting an apartment might not seem like a big deal, but most landlords will run your credit to make sure they’re not getting themselves into a financially risky situation. The lower your credit score, the higher risk you seem to a landlord.
- If you’re facing eviction due to COVID, watch this video: https://www.facebook.com/creditanddebt.org/videos/570209650306369/
- Many insurance companies now check your credit and adjust your rates based how risky they think you are
- You could be a victim of fraud and not even know it.
- The only proactive way to protect your identity and your finances is by looking at your credit report. Credit fraud affects everyone, including and sometimes ESPECIALLY people with a credit score in the 3-4-500 range. Why? Because thieves are betting on the fact that you don’t care.
- Take a moment, go to the annual credit report . com and check out your credit report. If you have any questions or suspicions, you can file a report right there.
- Get your free credit report: https://www.annualcreditreport.com/index.action
- It takes a while to improve your score
- If you have a credit score in the 3-4-500 range, it can be discouraging to get going. I think the biggest thing if you have a low credit score is to remind yourself that over 40 million people in the US have a credit score lower than 550.
- Because it takes a while – from 2 to 10 years, depending on the type of credit event that’s hurting your score – it’s best to be proactive to avoid additional damage.
- Hard inquiries take 2 years to be removed from your credit report, but they might only impact you for about 6 months.
- Missed payments take 7 years
- Bankruptcy can take up to 10
- Credit history is one of the factors that affect your credit score
- If you’re working on your credit score, you’re making good financial moves.
- This is a blanket statement, obviously. There are certainly times in life where you need to make a decision that might negatively impact your score but positively impact your life.
- That said, most moves you make to increase your credit score are moves that benefit your financial stability in general.
- Catching up on your payments
- The debt collectors will stop calling you
- Getting out of debt
- Call our coaches (for free) if you’re curious about debt relief options: https://creditanddebt.org/
- When you are ready to make a purchase using credit (car, home, furniture, etc), you’ll be in the right place.
- You might think a car purchase is years in the future, but a great credit score might be years off as well.
- there are multiple strategic ways you can start improving your score now so you can begin lowering the interest rates you pay and hopefully achieve your goals sooner than you expected.
- Catching up on your payments
- A couple of closing thoughts:
- Avoid scams. Only a few credit repair companies are legitimate and even these use questionable tactics while charging you a LOT of money. questionable. Most are scams.
- It typically takes 12-18 months to see good progress but improvements can be achieved quickly with sound advice. And after about 3-6 months of positive changes, your score will start moving in the right direction.
Now that you – hopefully – agree that you should care about your score, tune in next week because we are going to dive further into improving your score and making moves towards SUCCESS in your finances. Here’s the thing, if you still are like “why do I care? none of this applies to me” I want to know. I want to know why you’re in that boat and I want to chat about it. This is why I’m here so please reach out to me.
I hope we answered all of your questions today and if I didn’t and you still have questions, please reach out. So, you can comment on this post. There are a lot of people out there facing these circumstances so please take a moment to hit that thumbs up button and share this! If you like and share our stuff, we benefit because more people see it and you benefit because if you really do like it, you’ll see it more often. You can also email me at askabby@creditanddebt.org, go follow my FB page, ASK ABBY, subscribe to our YouTube Channel and opt to get notifications on FB when we go live at 12:30 pacific on wednesdays! As always, thank you so much for tuning in and we will see you next week on Ask Abby.
