December 18, 2024 • 34 mins
Elevate your financial game in 2025 with actionable insights on credit health improvement. Join me, Kim Chapman, alongside Tricia Arroyo from Confluent Strategies, as we unlock the secrets to mastering your credit score. From understanding why January is the perfect month to reassess your financial goals to deciphering the mysteries behind credit score variations among different bureaus, this episode is packed with strategies that will set you on the path to financial empowerment.
Curious about how to build and maintain a robust credit foundation? Learn the essential habits such as timely bill payments and managing credit utilization effectively. Tricia and I shed light on the intricacies of credit reports, and delve into navigating credit disputes without the need for costly credit clinics. We also tackle common misconceptions about credit scores, such as the myth of needing a perfect score, and highlight the significance of alternative data like rent payments in evaluating creditworthiness.
And it doesn't stop there. We dive into how life events, including natural disasters, impact your credit report and provide tips on minimizing the effects of credit inquiries. Whether you're planning a big purchase or simply want to ensure financial stability, our conversation equips you with the knowledge and steps to take charge of your financial future. Tune in to chart a course towards achieving your credit-related goals and set a strong financial foundation for the year ahead.
Have an idea for a show or a question for Kim? Send us a text message
Welcome to Money Matters, the podcast that focuses on how to use the money you have, make the money you need and save the money you want – brought to you by Neighbors Federal Credit Union.
The information, opinions, and recommendations presented in this Podcast are for general information only and any reliance on the information provided in this Podcast is done at your own risk. This Podcast should not be considered professional advice.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Welcome to Money Matters, the podcast that
focuses on how to use the moneyyou have, make the money you
need and save the money you want.
Now here is your host, ms Kim.
Speaker 2 (00:12):
Chapman.
Welcome to another edition ofMoney Matters.
I am your host, kim Chapman.
As we kick off a brand new year, it's a perfect opportunity to
refocus on our financial goals.
Let's pause for a minute.
Have you made any?
Have you done those silly NewYear's resolutions?
We want to do something betterthan that.
We want to really help youfinancially thrive in 2025.
(00:35):
And what better place to startthan with your credit right, no
matter where you are.
They range from 300 to 850.
So, whether you're on the lowerend or the higher end, there's
always, always going to be roomfor improvement.
And so joining me today issales executive Tricia Arroyo,
with Confluent Strategies, andshe is an expert, and she's
(00:56):
going to help you figure outwhat steps you can take to get
your credit in check so that youcan reach financial stability
and reach those financial goalsthat you have in mind.
Because I know you did it.
January just started.
I know you wrote down somethings that you want to do for
your finances.
Speaker 1 (01:11):
Welcome, tricia, thank you, kim, glad to be here
today.
Speaker 2 (01:14):
I am happy to have you here.
I know our audience, ourlisteners are, you know, ears
wide open because they want toknow how can they make some
changes in 2025.
We have people that are saying,hey, this is the year I'm going
to buy a house, I want a newcar, I need my credit score to
go up.
And it may just be somebodythat says, hey, I just wanted to
be higher, I don't need to buyanything, but I just wanted to
(01:40):
be where I wanted to be.
So if I need to get something,so you're going to help us do
that.
Speaker 1 (01:46):
So why do you think this year, why do you think
January is always a good time tostart?
Well, we always say thebeginning of the year is a good,
perfect time to focus on yourcredit and your health and your
financial goals, because itrepresents like a fresh start.
Many people get inspired by theidea of a clean slate, setting
resolutions and maybe creatingpositive changes.
So the beginning of the year isjust the perfect time to do
that.
You know everybody's kind ofgetting over the holiday season
(02:09):
and starting off fresh, soJanuary is the perfect time to
get your goals in order.
Speaker 2 (02:14):
And the good thing about it is, even if that's not
you, if you're like, hey, Idon't do those New Year's
resolutions because people don'tstick to it, guess what?
Listen to the the information,because, whether you decide that
January is not the time, maybeit's gonna be February, maybe
it's gonna be June, this isgonna be some information that
you can use 365 days a year.
So, tricia, can you provide abrief overview of how Equifax
(02:36):
and other credit bureauscontribute to determining credit
scores?
Absolutely.
Speaker 1 (02:41):
So Equifax, along with the three other reporting
credit bureaus, we actuallycollect financial information
from the lenders, banks andcreditors.
We take this data, such as, youknow, your loan information,
your credit card balances,payment history, credit limits
and any outstanding debt, and wecompile this onto a credit
report and it summarizes aconsumer's credit history.
(03:05):
You're going to also havepositive information and
negative information, socollection items and
bankruptcies will all actuallybe on the credit report.
So, basically the creditreporting agencies, we just
house the information so thecreditors actually report it and
we collect it and summarize itand put it on a credit report.
Speaker 2 (03:24):
So let's talk about their report, because, of course
, as a financial counselor,members come in or they'll call
in saying I want to improve myscore and I'll say well, what is
your score?
Then we'll go into a session,we'll pull a score and it
doesn't match.
So why might a person's creditscore vary between different
bureaus and scoring agencies?
Speaker 1 (03:42):
OK, well, very good question, because a lot of folks
have that question.
A person's credit score will bedifferent based on the
information that's reported tothe bureaus.
So not all creditors areresponsible for reporting their
debt to all three of the creditreporting agencies.
Some folks only report toEquifax, some only report to
Experian and some report to allthree.
(04:02):
So depending on how they report, you're going to have different
information on the creditreports.
Also, there's a couple ofdifferent scores.
There's a FICO score and aVantage score.
So depending on which scoreyour lender is pulling, you know
, you're going to have adifferent credit score.
Speaker 2 (04:19):
So quick question Is there a rhyme or reason why some
creditors will report to allthree and some may only report
to one or two?
Speaker 1 (04:27):
It depends on where that creditor is located.
So in the South in Louisiana,the Southeast Equifax is a
primary bureau.
Up North it may be Experian orTransUnion.
So it just really depends onthe creditor and their
relationship.
But most of your largefinancial institutions they
report to all three.
Speaker 2 (04:48):
All right.
So let's start with the newbies, right?
Somebody that may maybe they'rea youngster 18, 19, 20, and
they're looking to start credit.
Or maybe there's somebodythat's even older and they're
like you know, I've kind ofstayed away from credit, I don't
know what it is, what.
What tips do you have to helpthem get started?
Speaker 1 (05:05):
Well, first of all, building a solid credit
foundation takes time, Can't bedone overnight.
Say that again.
Please say that again.
Building a solid creditfoundation takes time.
You cannot do it overnight.
So you need to start off withcredit accounts.
You know you can go to yourcredit union such as neighbors,
open up a credit card could be asmall $500 balance, but you
(05:29):
open up those credit cards andyou start paying them and you
pay them on time and so, as timegoes on, you will actually
build your credit.
Speaker 2 (05:37):
Tricia.
What are key habits for thoselooking to improve or maintain a
healthy credit score?
What are those habits theyshould?
Speaker 1 (05:44):
adapt.
It's essential to adapt goodfinancial habits.
First of all, I always tellpeople make sure you pay your
bills on time.
Maybe set up auto pay so youdon't miss any payments.
Don't max out your credit cards, because that's weighted
heavily on your credit score.
Now.
Speaker 2 (06:00):
I'm going to stop you just for a second.
You said don't max out creditcards, and that's very, very
important, but maybe I want to.
I'm going to stop you just fora second.
You said don't max out creditcards, and that's very, very
important, but maybe I want to,I guess, get to the nitty gritty
of that, because I know, when Iwas 18, I knew that term don't
max out the credit card.
So maybe I went just a littlebit below the limit, but they
should actually be doing alittle bit better than that.
Where should that ratio be?
Speaker 1 (06:20):
We always say about 30 percent.
So utilization plays animportant role in the
calculations of the score.
So if you keep your utilizationbelow 30 percent of your credit
total credit limit, that'sgoing to give you a pretty good
score.
Speaker 2 (06:40):
I think that's so important because it's such a
common term to say maxed out,maxed out, don't get maxed out.
And so individuals like myselfwhen I was young, I was like,
well, was it maxed out?
But my credit score wasn't goodbecause I didn't know anything
about that.
30% credit utilization and justto kind of explain that a
little bit more, that means youlook at what your limit is,
that's been assigned to you, andthen try not to keep a balance
over 30% of that, no matter whatit is.
If it's $1,000, 30% of that is$300.
(07:02):
That's going to be your targetamount, whereas when I think of
maxed out and not being maxedout, that could be $700 to
somebody, but really that magicnumber in this case is 30% 300.
Speaker 1 (07:13):
That's correct.
Speaker 2 (07:14):
I just really wanted to reiterate that because we use
that maxed out term and peopleare walking around saying, hey,
I'm not maxed out, but thenthey're not understanding why
their credit score isn't as highas they would like it to be.
Speaker 1 (07:27):
That's correct.
Also, avoid applying for toomuch credit at one time, because
that can make you look risky tocreditors.
And then I would always sayavoid closing out old and unused
credit cards, because when youclose that out, you're closing
out a lot of your credit history.
Speaker 2 (07:41):
Can you speak a little bit more to?
When you say too many creditcards are opening too many
accounts, and the reason that Isay that is so many young
listeners that want to startcredit.
They're under the myth that, oh, I need to build credit, I got
to have credit, so they'll goout and they'll open three, four
, five, six, 10 accounts, andthen they'll come and say, well,
I thought that's what I wassupposed to do, so can you maybe
(08:02):
give us a little perspective asto how could we determine
what's too many accounts?
Well, that's a tricky question.
Speaker 1 (08:09):
So nobody really knows.
All of that information isproprietary to FICO and Vantage
the number of ideal accountsthat actually goes into
developing the score.
What I always tell young peopleor consumers just don't go
crazy.
Take out the credit cards thatyou need, you know.
So I mean, if you need a Visacard or a gas card or a
(08:30):
department store card, just getthe number of credit cards that
you need, you know.
Don't go out and open up allthese credit cards during the
holidays because they're givingyou free interest and, you know,
free umbrellas.
Speaker 2 (08:43):
That's how they got me Exactly.
All right.
So and like I said, Iinterrupted you because I did
some of those points.
It's like I know that ourlisteners need to hear some of
these things a little bit louder, a little bit more, over and
over again, because you knowthese are the types of mistakes
that I see.
After the fact, they go over 30percent, they go and open four
(09:06):
or five and 10 accounts, likeyou said, that they don't even
need, but they figure thatthat's something that's going to
help them out.
So go ahead.
Are there some other you knowkey tips that you want to
provide for somebody juststarting out.
Speaker 1 (09:18):
That's.
That's pretty much it, just youknow.
Like I said, don't max out yourcredit cards.
Pay your bills on time.
Avoid too much credit.
Speaker 2 (09:27):
Avoid too much credit .
Got to have a little to have acredit score, but you don't have
to have a lot.
So typically, how long does ittake for positive financial
actions to reflect on one'scredit report?
Speaker 1 (09:39):
That could take anywhere between 30 and 45 days,
depending on how and when thecreditor reports their data to
us.
So if you go out and open up acredit card January 1st, they're
probably not going to reportthat information to us until
February.
So it just all depends on theamount of time it takes for the
(10:00):
creditor to report thatinformation to us.
So I'd say anywhere between 30to 45 days.
Speaker 2 (10:05):
You know, every day I imagine how they have
statistics every four minutessomebody's doing something.
You know there are individuals,consumers, that have faced a
major financial setback.
What action should they take torebuild their credit?
Speaker 1 (10:18):
Yes.
So recovering from majorfinancial setback requires time,
effort and a strategic approach.
Create a budget.
I would always say evaluateyour income and expenses and
prioritize essential payments.
Review your credit report.
Always ensure that theinformation in your credit
report is accurate.
Understand if you have negativemarks.
(10:39):
Understand what that means.
I'd say pay off your debtstrategically.
Pay off the higher interestrate credit cards first, because
those are the ones that aregoing to kill you.
You can always seek financialhelp if you need.
You know.
Speaker 2 (10:52):
However, I would avoid credit clinics, and why
would you avoid those creditclinics?
Speaker 1 (10:57):
I would avoid credit clinics, because everything that
they're going to charge you todo, you can actually do that for
free.
Speaker 2 (11:03):
I feel like we just need to have an echo, because
everything you're saying is sospot on and it's just those
things that people really,really need to know.
As a matter of fact, when yousaid the word budget, I was just
thinking and I was looking overat Chad, who's recording this
that I need that buzzer thatgoes, and every time that we
have a guest that says you needto create a budget, chad, I need
(11:24):
you to hit a button that goesbum, bum, bum, bum, because it
is so key, it is such afoundation to financial
stability.
So we'll move along, we'll movealong.
How often should somebodymonitor their credit report?
Speaker 1 (11:36):
Well, you are actually entitled to a free copy
of your credit report once ayear from all three of the
credit reporting agencies.
So what I always tell folks is,since you get one from each of
the bureaus free one time a year, I would space them out.
So, every four months, get acopy of your credit report, look
at it, make sure it's correct,and so you're actually
(11:57):
monitoring it throughout theyear.
And there's lots of other sitesthat you can actually monitor
your credit report for free.
Speaker 2 (12:04):
Now, you and I, we've seen quite a few credit reports
in our days, so we know exactlywhat we're looking at.
We know exactly what we'relooking for.
How user-friendly, would yousay, credit reports are these
days for consumers to look at?
Speaker 1 (12:18):
They're very user-friendly, so they have all
of the information on there thatthe consumers need.
You know where they can disputethe information, but the
reports that consumers get arevery consumer friendly.
So and if they want to get acopy of their free credit report
, they need to go to its annualcredit report dot com.
That's where they will get afree copy of their credit report
(12:41):
.
Now you will not get a freecopy of your credit score, but
you will get a copy of your freecredit report.
Speaker 2 (12:47):
And I always tell consumers that everything is not
wrapped up in just a score,that you should take the time to
actually look at and read acredit report.
What are some of the key items?
You know I'm saying OK, I don't, I don't have a score.
Or even if I have a score, whatare the key things that are
driving that score?
What should they be looking forand analyzing on their own
(13:07):
personal report?
Speaker 1 (13:08):
Well, first of all, they need to make sure that you
know Everything is correct onthe credit report, including
starting with your name.
That's right.
Make sure your name is correct,your addresses, make sure all
the creditor information iscorrect and just make sure it's
actually your information on thecredit report.
Make sure your social iscorrect, your date of birth,
(13:28):
your age.
Make sure everything is correcton that credit report because
it will come into play wheneveryou go try to take out credit.
If you go to a creditor'soffice and apply for credit and
your information is incorrect.
So that's going to start awhirlwind and you really want to
make sure it's correct beforeyou go and try to take out an
(13:49):
auto loan or a mortgage or, youknow, even, a credit card.
Speaker 2 (13:52):
And if I look at a credit report and I do see that
something is wrong.
So let's talk a little bitabout maybe.
First of all, I want to talkabout the things that maybe that
won't matter.
So, for example, if they have awrong address, should that just
be a red flag or do I need tocontact them and have that
corrected or updated If there'san incorrect address on your
(14:13):
credit report, you need to goahead and dispute that and have
Equifax take it off.
Speaker 1 (14:17):
Strictly because if you've never lived there, then
you want it taken off Now.
If it was a previous address,leave it on there, because
that's going to show you knowwhere you've lived previously.
So you want to leave that onthere.
Speaker 2 (14:31):
If there is a legitimate mistake, let's say
that there's.
Is it fraud or could there justbe a mistake?
Because, guess what?
There are mistakes on thecredit reports, right?
Speaker 1 (14:40):
There can be mistakes , that is correct.
Speaker 2 (14:42):
Is there any particular thing that makes you
more vulnerable to a creditmistake than others?
And the reason I ask thatquestion is I always use the
example people that have thesame name, especially gentlemen,
and you know if your dad hasthe same name and then you have
the same address, those are twothings that you share in common.
My husband and son have thesame name, same address and, lo
(15:03):
and behold, the same birthday,so they share a lot of things in
common.
I've worked with twins in, youknow, over my years in the
credit union, where, of course,you know they had names.
You know how we like to dotwins Stacey and Tracy or Ron
and Don and then they have thesame birth date and back in the
day their Social Securitynumbers would be just one digit
(15:24):
off.
And so are there other factorsthat may make you more
vulnerable to having a mistakeon your credit report?
Speaker 1 (15:32):
Well, junior and seniors that always come into
play.
And you know, when I workedwith my creditors, I always tell
them look, when you're pullingan application, make sure you
put in the consumer's legal name.
You know, a lot of times herein the South you know we may go
by nicknames and so I go in andI want to apply for a loan and I
(15:52):
use my nickname.
Well, that's going to causeproblems because that's not your
legal name.
So really they should beapplying for credit with your
legal name.
You know, even though if youdon't like it, you still need to
apply for credit with yourlegal name, your date of birth,
your social address and so forth.
But junior and senior issuescome up all the time because a
(16:14):
lot of times creditors willleave that off or the applicant
will leave that off of theirapplication.
And if it is, if that person isa junior and they live at home
with their mother and fathersame address, same zip code so
we can it can cause problems.
Speaker 2 (16:32):
All right.
Do I need a PhD to fill out acredit dispute?
Speaker 1 (16:36):
No, no, they're, they're, they're really easy.
Speaker 2 (16:39):
And on average and I know it's going to be a case by
case, but on average, how longdoes it take for somebody to get
feedback, for a consumer to getfeedback on a dispute?
Speaker 1 (16:49):
So when a consumer files a dispute with the credit
bureaus, we send the dispute tothe to the financial institution
.
They have 30 days to respond tothat dispute.
If they do not respond to thatdispute in 30 days, then that
information is removed from theconsumer's credit report.
Speaker 2 (17:09):
So I want to talk a little bit about the different
scoring models.
Can you explain how recentupdates with the credit scoring
models could impact individuals'credit profile?
Yes, so there's been.
With the credit scoring modelscould impact individuals' credit
profile.
Speaker 1 (17:18):
Yes.
So there's been some recentcredit scoring models that have
introduced changes to make amore accurate and comprehensive
picture of a person's credit.
So we've just recentlyintroduced trended data, which
analyzes credit usage andpayment patterns over the past
24 months rather than justproviding a snapshot in time.
So what is an example of thatis, a person who consistently
(17:42):
pays down their balances orreduces their debt over time may
see a credit score boost, whilesomeone who carries high
balances all the time and onlymakes minimum payments, they
could potentially see a scoredrop if they pay on time.
Some of the positive changesare responsible, long-term
credit habits are rewarded andthin file consumers folks who
(18:05):
have limited credit history theybenefit from broader scoring.
And some of the negativechanges the high credit
utilization and inconsistentpayments those typically will be
penalized more heavily.
Speaker 2 (18:20):
So you talked a little bit about paying.
You know paying your debt down.
How does paying down debt orreducing credit card balances
impact your credit scores,because sometimes I've seen
where it has a positive andsometimes a negative.
My daughter texts me just theother day because she paid off
her credit card and her scorewent down.
She's like Mom, what's going on?
Speaker 1 (18:38):
And it also depends what else is going on.
She may have paid that creditcard down but then something
else hit.
So your score is dynamic, it'salways changing.
So you're just because you havea 750 today doesn't mean you'll
have a 750 tomorrow.
So with credit scores, they'realways changing.
So it just depends on what'sgoing on at that point in time.
So with credit scores, they'realways changing, so it just
depends on what's going on atthat point in time.
(19:00):
So you know there are differentfactors that go into the credit
score payment history, creditutilization, length of credit
history, credit mix and newcredit.
So those are the different fiveitems that go into a credit
score.
Speaker 2 (19:17):
So can you explain a little bit what credit mix means
?
Speaker 1 (19:20):
Credit mix means that , making sure you kind of have a
healthy mix of credit, makingsure that you don't have 15
revolving accounts out there.
So you know, making sure thatyou have a couple credit cards.
You probably have an auto loan,maybe a mortgage, so you know
you're less risky if you have ahouse, a mortgage, an auto loan
(19:40):
and so forth.
But really the two key factorsthat go into the credit score,
that make up that credit scoreabout 65 percent, is payment
history, how you pay your bills,making sure you're not
delinquent, and creditutilization.
Speaker 2 (19:56):
The big two that I tell people all the time 35
percent is that payment history,30 percent is that credit
utilization.
That's over half of your creditscore, right there.
Sixty five percent.
So those are the two thingsthat you got to get right.
You got to pay your bills ontime, right?
Absolutely, you've got to keepthat debt low, that's correct.
So, tricia, if I've had a hardtime and I wasn't paying my
(20:19):
bills on time, now I'm straightand I'm paying them on time, but
I've got all these ugly remarkson there, that's not really a
dispute, but I don't like it andit's probably going to keep me
from being able to get credit orbuy that house.
So can I just call a creditbureau and say, look, you know
it's.
Speaker 1 (20:37):
I want to dispute this because it's going to keep
me from getting other credit.
Well, unfortunately you can'tdispute anything that's on your
credit bureau.
You're entitled to dispute it.
However, your creditor isprobably not going to look so
kindly to that.
If you were delinquent on yourbills, then it's their
(21:00):
responsibility to report that tothe credit bureaus.
However, you may call yourcreditors and you may kind of
work out a deal with them, butyou can't call Equifax and we
can't remove anything.
So I mean, if you call us, wehave to reach out to the
creditor and get the responsefrom the credit grantor.
Call us, we have to reach outto the creditor and get the
response from the credit grantor.
(21:20):
So if you dispute it and wesend it to the credit grantor
and they come back and say theywere never 30 days delinquent,
then we remove that obviously.
But however, if the creditgrantor comes back and says yes,
they were 30 days delinquent,then we have to leave it on
there.
So you have to look at thecredit bureaus, as we just house
the information so you cancontact us and dispute anything,
but we have to go to thatcreditor.
Speaker 2 (21:42):
Now I'm going to age myself, because way back when,
right here in Baton Rouge, weactually used to have a credit
bureau office and you know, anda consumer could go in and talk
to a person and, you know, getinformation, learn about their
credit.
And I heard you just in generalsay you know you would call
Equifax, but is there an actualcustomer service line?
Can a consumer get somebody,whether it's Equifax, experian,
(22:05):
TransUnion?
Can you actually get a human onthe phone or is it going to be
you're forced to do somethingyou know, like a chat online or
an email?
Speaker 1 (22:13):
You can actually get a person on the phone so you can
contact Equifax by phone, bymail, or do an online dispute.
So either of those, any ofthose three ways.
And, yes, I used to work at theCredit Bureau of Baton Rouge.
Speaker 2 (22:28):
So you're aging yourself too?
Yes, I'm aging myself too.
Speaker 1 (22:31):
I worked at the Credit Bureau of Baton Rouge and
we did have a consumerdepartment and we would have
lots of people come in anddispute items on their credit
report.
But, like I said, we had tosend that off to the credit
grantors.
There was nothing that we coulddo.
We were just different.
Speaker 2 (22:44):
We were just still convenient and I tell you we'd
love it if we could have thatservice back again.
So we talked a little bit aboutdisputes and I know you
mentioned that if the creditordoesn't respond in 30 days,
typically it comes off.
What if the creditor is, youknow, hey, this is legit, this
is staying on, or I'm not ableto get a resolution?
(23:06):
What can a consumer do then ifthey're not getting a
satisfactory resolution?
Right?
Speaker 1 (23:11):
Well, they can actually contact the creditor
themselves and try to talk itthrough the creditor, talk it
through with the creditor to seeif they can come up with a
reasonable resolution.
Speaker 2 (23:22):
Now the 100-word statement.
Whenever I am teaching a classon credit and I say that, I get
wide eyes like nobody in theroom has ever heard of the
100-word statement.
Can you tell us a little bitabout what the 100-word
statement is, and when should aconsumer use that?
Speaker 1 (23:39):
Well, consumers are entitled to put a consumer
statement on their credit reportif they would like.
A lot of times folks will putthat on there if they're maybe
going through a divorce and theyjust want the credit grantor to
know a little bit more abouttheir situation rather than just
looking at the trade lines, soit can show maybe a bigger
picture of what's going on intheir life at that time.
(24:01):
So you can put a hundred wordstatement on the credit report.
Speaker 2 (24:05):
Another statement or term that I see on the credit
report often is affected by anatural disaster.
How do lenders view anindividual's credit report?
What impact does that statementhave?
Speaker 1 (24:17):
Well, that statement, you'll see that a lot you know,
living in Louisiana withhurricanes that have hit.
You know Katrina for a matter.
As a matter of fact, you knowpeople were out of work, people
lost their jobs, so they wouldput that on there.
And a lot of times it's thecreditors that put affected by
natural disaster.
Because you may have a consumerwho's never been delinquent
(24:38):
before in their entire life andthen all of a sudden a hurricane
comes in and impacts them andthey're out of work, they can't
pay their bills, and all of asudden they're 30 days, then 60
days and then they're 90 daysdelinquent on an account and
they've never been delinquentbefore in their entire life.
So that kind of shows acomplete picture of what's going
(24:58):
on.
Speaker 2 (24:59):
All right, so, Tricia , so you know.
We've been talking a lot abouthow to improve your score, how
many accounts you should andshouldn't have, but what I want
to talk about, what are thetypes of accounts that are
typically on the report and thetypes that are not on the report
?
For example, I've heard a trendnow that you can add your rent
to your credit report.
Speaker 1 (25:17):
That is a trend and that's called alternative data.
So there we do have alternativedata sets that creditors can
get, such as rent income,employment.
So that's a trend.
That that's that's comingaround the pipe right now.
But a lot of times on atraditional credit report you're
(25:37):
going to have your creditaccounts, your credit cards,
your mortgage, your auto loans.
Now your debit card informationis not on there, but just
basically your creditinformation.
But, however, the alternativedata, we can actually get that
information and it's not goingto be on the credit report, it's
just on a separate report thata creditor can actually access.
Speaker 2 (26:02):
And can that help boost my score.
Speaker 1 (26:04):
Can that help me look a little bit better it can, and
that's all solely dependent onthe creditor and their
underwriting guidelines.
So you know, they may look atit.
Well, hey, they've been payingtheir rent and they've been, you
know, in this apartment forthree years and they have good
rent history and they pay theirbills on time, and so that may
give them a little bit of boost.
Speaker 2 (26:25):
All right If I have an 813 score.
Should I?
Is there something I should do?
Is it worth it if I want tohave an 850?
I'm a perfectionist, right, andI'm coming to you or I'm going
to a counselor and it's like Iwant to get an 850 just because
I want to live that perfect life.
Is there any reason that aperson should strive to get to
(26:46):
an 850?
And if so, are there anyparticular strategies that exist
for those top tier individuals?
No, for those top tierindividuals.
Speaker 1 (26:56):
No, and I laugh because people complain.
People will call and you know,my credit score is, you know,
815 and I can't believe it's solow.
And I'm like, oh my goodness,it is not low, that you have a
great credit score, Do not worryabout it.
So the factors that go intothese credit scores, they're all
proprietary.
So there's different algorithmsthat go into these credit
(27:17):
scores.
They're all proprietary.
So there's different algorithmsthat go into these credit
scores and nobody really knowswhat they are, and so I don't
know how to get you to have aperfect credit score.
Speaker 2 (27:29):
Then why are you here , Trisha?
Speaker 1 (27:33):
You know, if you pay your bills and you don't
overextend yourself, you'regoing to be fine.
Speaker 2 (27:40):
So let's talk about another sore spot, I think, when
we're talking about creditInquiries oh my goodness, you
know there's so many myths aboutcredit out in the world and I
think inquiries is definitely atthe top of the list, because
you have people that just theyfear an inquiry like the plague.
Talk a little bit, you knowabout what an inquiry is and you
(28:01):
know when should a person becautious about having too many
inquiries?
And then even the differencebetween a soft inquiry and a
hard inquiry, right.
Speaker 1 (28:09):
Well, inquiries do not hurt your credit score, like
a lot of people think they doso.
In the past they may haveimpacted the credit score, but
now they are much more consumerfriendly.
So when you're out thereapplying for credit, if you go
to neighbors and you open up acredit account, a credit card,
(28:30):
it's going to post a hardinquiry.
Speaker 2 (28:34):
And is that going to take my score?
Speaker 1 (28:35):
100 points.
No, it is not going to takecredit score 100 points.
Inquiries only impact thecredit score about 10 percent.
So the way inquiries work onthe credit report, inquiries
stay on there for two years butin the calculations of the score
it's going to only go back forone year.
So we only look at one year ofinquiries.
(28:57):
And the way it actually islooked at is that we group those
into groups.
So if you're out shopping ratesfor a credit card or a mortgage
, you're not going to bepenalized for shopping rates.
So we take those inquiries andwe group those into one for 45
days so that allows you time togo out and shop for credit and
(29:17):
not be penalized Because youknow if you go to an auto
dealership they're going to pullyour credit From.
Speaker 2 (29:23):
A to Z.
Speaker 1 (29:24):
Yeah, they're going to send it out to five or six
different lenders, well, thoselenders are going to pull your
credit report as well, but inthe calculations the score is
going to only look at it as oneinquiry.
The score is going to only lookat it as one inquiry, so as far
as it impacting your creditscore.
Speaker 2 (29:44):
That's not going to be why you're going to have a
bad credit score, exactly so.
You know, sometimes we havemembers that come in and say you
know, I had my credit pulledand it dropped, you know, 100
points.
And it's like let's look atyour report because more than
likely, there's something elsegoing on, absolutely, absolutely
.
And of course, you know it'ssad that, no matter what the
topic is, it seems like I alwayshave to bring up those things,
those red flags, those scams.
Are there any red flags orscams, things consumers should
(30:06):
be aware of, especially whenyou're vulnerable and you want
to improve your credit?
You know there's going to be somuch out there that says, hey,
come over here, we can do this.
There is going to be so muchout there that says, hey, come
over here, we can do this, wecan do that.
And then, a lot of times, thisstuff is just scams.
Are there anything, anyparticular piece of information,
you want consumers to know, tobe aware of, in terms of, hey, I
know you want to improve yourscore, but stay away from this.
(30:27):
Or if you see this, this isgoing to be a red flag.
Speaker 1 (30:30):
Well, there's no quick fix to fix your credit.
It takes time.
So if you've had some bumps inthe road and you have some
negative things that haveimpacted your credit score, it's
just going to take time.
So, as long as you catch up onyour obligations and you're
paying your bills on time, overtime, your credit score is going
to improve.
Avoid the credit clinics.
(30:52):
Everything that they do they'regoing to charge you for and you
could actually do it yourself.
So those are a big scam, I mean.
And they'll charge you five,six hundred dollars to dispute
information that you canactually do for free.
Speaker 2 (31:06):
All right.
So, tricia, there's somebodyout there listening saying my
credit score sucks.
It always goes back to college,right?
Oh, when I was in college and Ididn't know any better and we
didn't have financial literacyclasses, and so my score sucks.
But I'm ready to make a change.
Right, I need to get out of the300s.
I need to get out of the 400s.
I want to at least get to fiveor maybe one day eventually get
(31:28):
to a seven.
So if I'm that person and Ihave those skeletons of
yesteryear in my on my creditreport, where do I start?
What do I do?
Speaker 1 (31:38):
Well, first of all, I'd get a copy of your credit
report and I would actually seewhere the problems are.
And so if you had opened upcredit accounts when you were in
college and maybe they'recharged off, you may want to
reach out to those creditors andsee if you can come up with an
alternative to to make amends,you know, you know offer a
settlement and then start withsome of the credit builder
(32:02):
credit cards and just go fromthere.
Speaker 2 (32:05):
All right.
So, of course, the whole goalof this show and having you sit
down with me is to help ourconsumers, you know, reset,
refresh their credit and, youknow, start making things a
little bit better in 2025.
So what are your final tips forthat individual that says, hey,
that's me, I want to be able toimprove my credit score?
What are those key steps, keythings they need to be working
(32:28):
on or focusing on?
Speaker 1 (32:30):
First of all, I would say monitor your credit report
regularly.
Make sure you know what's onthe credit report you know.
Check for any inaccuracies.
Make sure it's up to date withyour most current information.
Don't just go in blind to acreditor's office and try to buy
a car or a mortgage you know.
(32:51):
Make sure you know what's onthat credit report.
Also, I would say pay down yourhigh interest credit cards.
That's imperative.
So pay those down first andthen also set up and maintain
online payments on time payments.
Speaker 2 (33:08):
Yes, definitely.
Speaker 1 (33:09):
You just want to make sure that you're paying those
bills on time and if you forget,like I do sometimes, you know,
go online and set up theautomated payments.
Speaker 2 (33:19):
Well, this is good information.
So what we're going to have youdo is come back in about six
months so that when we're allreviewing what those New Year's
resolutions were and you know,I'm going to do this, I'm going
to do that and hopefully many ofthose individuals out there
listening are actually going todo those things.
But they may get to a pointwhere it's like, ok, what now
(33:41):
I've moved the needle a littlebit.
What's my next step?
So can I get you to commit tocoming back in about six months
and we'll kind of do a refresher, see what new trends may be
going on with credit, or justkind of address those?
I've done those things.
I've opened up a new creditcard account, I've been paying
my bills on time.
What do we do next?
Sure, that sounds good.
All right, ladies, and gentlemen, you heard it because you know
got to make sure I can get herback in here.
Patricia, thank you so much forcoming by and sharing this
(34:02):
information.
Like I said, I think it's agreat way to refresh and start
the new year off looking at thatcredit, because it impacts so
much of what we do on a dailybasis.
Right Well, thank you, Iappreciate you having me.
Welcome to Money Matters, the podcast that
focuses on how to use the moneyyou have, make the money you
need and save the money you want.
Now here is your host, ms Kim.
Speaker 2 (00:12):
Chapman.
Welcome to another edition ofMoney Matters.
I am your host, kim Chapman.
As we kick off a brand new year, it's a perfect opportunity to
refocus on our financial goals.
Let's pause for a minute.
Have you made any?
Have you done those silly NewYear's resolutions?
We want to do something betterthan that.
We want to really help youfinancially thrive in 2025.
(00:35):
And what better place to startthan with your credit right, no
matter where you are.
They range from 300 to 850.
So, whether you're on the lowerend or the higher end, there's
always, always going to be roomfor improvement.
And so joining me today issales executive Tricia Arroyo,
with Confluent Strategies, andshe is an expert, and she's
(00:56):
going to help you figure outwhat steps you can take to get
your credit in check so that youcan reach financial stability
and reach those financial goalsthat you have in mind.
Because I know you did it.
January just started.
I know you wrote down somethings that you want to do for
your finances.
Speaker 1 (01:11):
Welcome, tricia, thank you, kim, glad to be here
today.
Speaker 2 (01:14):
I am happy to have you here.
I know our audience, ourlisteners are, you know, ears
wide open because they want toknow how can they make some
changes in 2025.
We have people that are saying,hey, this is the year I'm going
to buy a house, I want a newcar, I need my credit score to
go up.
And it may just be somebodythat says, hey, I just wanted to
be higher, I don't need to buyanything, but I just wanted to
(01:40):
be where I wanted to be.
So if I need to get something,so you're going to help us do
that.
Speaker 1 (01:46):
So why do you think this year, why do you think
January is always a good time tostart?
Well, we always say thebeginning of the year is a good,
perfect time to focus on yourcredit and your health and your
financial goals, because itrepresents like a fresh start.
Many people get inspired by theidea of a clean slate, setting
resolutions and maybe creatingpositive changes.
So the beginning of the year isjust the perfect time to do
that.
You know everybody's kind ofgetting over the holiday season
(02:09):
and starting off fresh, soJanuary is the perfect time to
get your goals in order.
Speaker 2 (02:14):
And the good thing about it is, even if that's not
you, if you're like, hey, Idon't do those New Year's
resolutions because people don'tstick to it, guess what?
Listen to the the information,because, whether you decide that
January is not the time, maybeit's gonna be February, maybe
it's gonna be June, this isgonna be some information that
you can use 365 days a year.
So, tricia, can you provide abrief overview of how Equifax
(02:36):
and other credit bureauscontribute to determining credit
scores?
Absolutely.
Speaker 1 (02:41):
So Equifax, along with the three other reporting
credit bureaus, we actuallycollect financial information
from the lenders, banks andcreditors.
We take this data, such as, youknow, your loan information,
your credit card balances,payment history, credit limits
and any outstanding debt, and wecompile this onto a credit
report and it summarizes aconsumer's credit history.
(03:05):
You're going to also havepositive information and
negative information, socollection items and
bankruptcies will all actuallybe on the credit report.
So, basically the creditreporting agencies, we just
house the information so thecreditors actually report it and
we collect it and summarize itand put it on a credit report.
Speaker 2 (03:24):
So let's talk about their report, because, of course
, as a financial counselor,members come in or they'll call
in saying I want to improve myscore and I'll say well, what is
your score?
Then we'll go into a session,we'll pull a score and it
doesn't match.
So why might a person's creditscore vary between different
bureaus and scoring agencies?
Speaker 1 (03:42):
OK, well, very good question, because a lot of folks
have that question.
A person's credit score will bedifferent based on the
information that's reported tothe bureaus.
So not all creditors areresponsible for reporting their
debt to all three of the creditreporting agencies.
Some folks only report toEquifax, some only report to
Experian and some report to allthree.
(04:02):
So depending on how they report, you're going to have different
information on the creditreports.
Also, there's a couple ofdifferent scores.
There's a FICO score and aVantage score.
So depending on which scoreyour lender is pulling, you know
, you're going to have adifferent credit score.
Speaker 2 (04:19):
So quick question Is there a rhyme or reason why some
creditors will report to allthree and some may only report
to one or two?
Speaker 1 (04:27):
It depends on where that creditor is located.
So in the South in Louisiana,the Southeast Equifax is a
primary bureau.
Up North it may be Experian orTransUnion.
So it just really depends onthe creditor and their
relationship.
But most of your largefinancial institutions they
report to all three.
Speaker 2 (04:48):
All right.
So let's start with the newbies, right?
Somebody that may maybe they'rea youngster 18, 19, 20, and
they're looking to start credit.
Or maybe there's somebodythat's even older and they're
like you know, I've kind ofstayed away from credit, I don't
know what it is, what.
What tips do you have to helpthem get started?
Speaker 1 (05:05):
Well, first of all, building a solid credit
foundation takes time, Can't bedone overnight.
Say that again.
Please say that again.
Building a solid creditfoundation takes time.
You cannot do it overnight.
So you need to start off withcredit accounts.
You know you can go to yourcredit union such as neighbors,
open up a credit card could be asmall $500 balance, but you
(05:29):
open up those credit cards andyou start paying them and you
pay them on time and so, as timegoes on, you will actually
build your credit.
Speaker 2 (05:37):
Tricia.
What are key habits for thoselooking to improve or maintain a
healthy credit score?
What are those habits theyshould?
Speaker 1 (05:44):
adapt.
It's essential to adapt goodfinancial habits.
First of all, I always tellpeople make sure you pay your
bills on time.
Maybe set up auto pay so youdon't miss any payments.
Don't max out your credit cards, because that's weighted
heavily on your credit score.
Now.
Speaker 2 (06:00):
I'm going to stop you just for a second.
You said don't max out creditcards, and that's very, very
important, but maybe I want to.
I'm going to stop you just fora second.
You said don't max out creditcards, and that's very, very
important, but maybe I want to,I guess, get to the nitty gritty
of that, because I know, when Iwas 18, I knew that term don't
max out the credit card.
So maybe I went just a littlebit below the limit, but they
should actually be doing alittle bit better than that.
Where should that ratio be?
Speaker 1 (06:20):
We always say about 30 percent.
So utilization plays animportant role in the
calculations of the score.
So if you keep your utilizationbelow 30 percent of your credit
total credit limit, that'sgoing to give you a pretty good
score.
Speaker 2 (06:40):
I think that's so important because it's such a
common term to say maxed out,maxed out, don't get maxed out.
And so individuals like myselfwhen I was young, I was like,
well, was it maxed out?
But my credit score wasn't goodbecause I didn't know anything
about that.
30% credit utilization and justto kind of explain that a
little bit more, that means youlook at what your limit is,
that's been assigned to you, andthen try not to keep a balance
over 30% of that, no matter whatit is.
If it's $1,000, 30% of that is$300.
(07:02):
That's going to be your targetamount, whereas when I think of
maxed out and not being maxedout, that could be $700 to
somebody, but really that magicnumber in this case is 30% 300.
Speaker 1 (07:13):
That's correct.
Speaker 2 (07:14):
I just really wanted to reiterate that because we use
that maxed out term and peopleare walking around saying, hey,
I'm not maxed out, but thenthey're not understanding why
their credit score isn't as highas they would like it to be.
Speaker 1 (07:27):
That's correct.
Also, avoid applying for toomuch credit at one time, because
that can make you look risky tocreditors.
And then I would always sayavoid closing out old and unused
credit cards, because when youclose that out, you're closing
out a lot of your credit history.
Speaker 2 (07:41):
Can you speak a little bit more to?
When you say too many creditcards are opening too many
accounts, and the reason that Isay that is so many young
listeners that want to startcredit.
They're under the myth that, oh, I need to build credit, I got
to have credit, so they'll goout and they'll open three, four
, five, six, 10 accounts, andthen they'll come and say, well,
I thought that's what I wassupposed to do, so can you maybe
(08:02):
give us a little perspective asto how could we determine
what's too many accounts?
Well, that's a tricky question.
Speaker 1 (08:09):
So nobody really knows.
All of that information isproprietary to FICO and Vantage
the number of ideal accountsthat actually goes into
developing the score.
What I always tell young peopleor consumers just don't go
crazy.
Take out the credit cards thatyou need, you know.
So I mean, if you need a Visacard or a gas card or a
(08:30):
department store card, just getthe number of credit cards that
you need, you know.
Don't go out and open up allthese credit cards during the
holidays because they're givingyou free interest and, you know,
free umbrellas.
Speaker 2 (08:43):
That's how they got me Exactly.
All right.
So and like I said, Iinterrupted you because I did
some of those points.
It's like I know that ourlisteners need to hear some of
these things a little bit louder, a little bit more, over and
over again, because you knowthese are the types of mistakes
that I see.
After the fact, they go over 30percent, they go and open four
(09:06):
or five and 10 accounts, likeyou said, that they don't even
need, but they figure thatthat's something that's going to
help them out.
So go ahead.
Are there some other you knowkey tips that you want to
provide for somebody juststarting out.
Speaker 1 (09:18):
That's.
That's pretty much it, just youknow.
Like I said, don't max out yourcredit cards.
Pay your bills on time.
Avoid too much credit.
Speaker 2 (09:27):
Avoid too much credit .
Got to have a little to have acredit score, but you don't have
to have a lot.
So typically, how long does ittake for positive financial
actions to reflect on one'scredit report?
Speaker 1 (09:39):
That could take anywhere between 30 and 45 days,
depending on how and when thecreditor reports their data to
us.
So if you go out and open up acredit card January 1st, they're
probably not going to reportthat information to us until
February.
So it just all depends on theamount of time it takes for the
(10:00):
creditor to report thatinformation to us.
So I'd say anywhere between 30to 45 days.
Speaker 2 (10:05):
You know, every day I imagine how they have
statistics every four minutessomebody's doing something.
You know there are individuals,consumers, that have faced a
major financial setback.
What action should they take torebuild their credit?
Speaker 1 (10:18):
Yes.
So recovering from majorfinancial setback requires time,
effort and a strategic approach.
Create a budget.
I would always say evaluateyour income and expenses and
prioritize essential payments.
Review your credit report.
Always ensure that theinformation in your credit
report is accurate.
Understand if you have negativemarks.
(10:39):
Understand what that means.
I'd say pay off your debtstrategically.
Pay off the higher interestrate credit cards first, because
those are the ones that aregoing to kill you.
You can always seek financialhelp if you need.
You know.
Speaker 2 (10:52):
However, I would avoid credit clinics, and why
would you avoid those creditclinics?
Speaker 1 (10:57):
I would avoid credit clinics, because everything that
they're going to charge you todo, you can actually do that for
free.
Speaker 2 (11:03):
I feel like we just need to have an echo, because
everything you're saying is sospot on and it's just those
things that people really,really need to know.
As a matter of fact, when yousaid the word budget, I was just
thinking and I was looking overat Chad, who's recording this
that I need that buzzer thatgoes, and every time that we
have a guest that says you needto create a budget, chad, I need
(11:24):
you to hit a button that goesbum, bum, bum, bum, because it
is so key, it is such afoundation to financial
stability.
So we'll move along, we'll movealong.
How often should somebodymonitor their credit report?
Speaker 1 (11:36):
Well, you are actually entitled to a free copy
of your credit report once ayear from all three of the
credit reporting agencies.
So what I always tell folks is,since you get one from each of
the bureaus free one time a year, I would space them out.
So, every four months, get acopy of your credit report, look
at it, make sure it's correct,and so you're actually
(11:57):
monitoring it throughout theyear.
And there's lots of other sitesthat you can actually monitor
your credit report for free.
Speaker 2 (12:04):
Now, you and I, we've seen quite a few credit reports
in our days, so we know exactlywhat we're looking at.
We know exactly what we'relooking for.
How user-friendly, would yousay, credit reports are these
days for consumers to look at?
Speaker 1 (12:18):
They're very user-friendly, so they have all
of the information on there thatthe consumers need.
You know where they can disputethe information, but the
reports that consumers get arevery consumer friendly.
So and if they want to get acopy of their free credit report
, they need to go to its annualcredit report dot com.
That's where they will get afree copy of their credit report
(12:41):
.
Now you will not get a freecopy of your credit score, but
you will get a copy of your freecredit report.
Speaker 2 (12:47):
And I always tell consumers that everything is not
wrapped up in just a score,that you should take the time to
actually look at and read acredit report.
What are some of the key items?
You know I'm saying OK, I don't, I don't have a score.
Or even if I have a score, whatare the key things that are
driving that score?
What should they be looking forand analyzing on their own
(13:07):
personal report?
Speaker 1 (13:08):
Well, first of all, they need to make sure that you
know Everything is correct onthe credit report, including
starting with your name.
That's right.
Make sure your name is correct,your addresses, make sure all
the creditor information iscorrect and just make sure it's
actually your information on thecredit report.
Make sure your social iscorrect, your date of birth,
(13:28):
your age.
Make sure everything is correcton that credit report because
it will come into play wheneveryou go try to take out credit.
If you go to a creditor'soffice and apply for credit and
your information is incorrect.
So that's going to start awhirlwind and you really want to
make sure it's correct beforeyou go and try to take out an
(13:49):
auto loan or a mortgage or, youknow, even, a credit card.
Speaker 2 (13:52):
And if I look at a credit report and I do see that
something is wrong.
So let's talk a little bitabout maybe.
First of all, I want to talkabout the things that maybe that
won't matter.
So, for example, if they have awrong address, should that just
be a red flag or do I need tocontact them and have that
corrected or updated If there'san incorrect address on your
(14:13):
credit report, you need to goahead and dispute that and have
Equifax take it off.
Speaker 1 (14:17):
Strictly because if you've never lived there, then
you want it taken off Now.
If it was a previous address,leave it on there, because
that's going to show you knowwhere you've lived previously.
So you want to leave that onthere.
Speaker 2 (14:31):
If there is a legitimate mistake, let's say
that there's.
Is it fraud or could there justbe a mistake?
Because, guess what?
There are mistakes on thecredit reports, right?
Speaker 1 (14:40):
There can be mistakes , that is correct.
Speaker 2 (14:42):
Is there any particular thing that makes you
more vulnerable to a creditmistake than others?
And the reason I ask thatquestion is I always use the
example people that have thesame name, especially gentlemen,
and you know if your dad hasthe same name and then you have
the same address, those are twothings that you share in common.
My husband and son have thesame name, same address and, lo
(15:03):
and behold, the same birthday,so they share a lot of things in
common.
I've worked with twins in, youknow, over my years in the
credit union, where, of course,you know they had names.
You know how we like to dotwins Stacey and Tracy or Ron
and Don and then they have thesame birth date and back in the
day their Social Securitynumbers would be just one digit
(15:24):
off.
And so are there other factorsthat may make you more
vulnerable to having a mistakeon your credit report?
Speaker 1 (15:32):
Well, junior and seniors that always come into
play.
And you know, when I workedwith my creditors, I always tell
them look, when you're pullingan application, make sure you
put in the consumer's legal name.
You know, a lot of times herein the South you know we may go
by nicknames and so I go in andI want to apply for a loan and I
(15:52):
use my nickname.
Well, that's going to causeproblems because that's not your
legal name.
So really they should beapplying for credit with your
legal name.
You know, even though if youdon't like it, you still need to
apply for credit with yourlegal name, your date of birth,
your social address and so forth.
But junior and senior issuescome up all the time because a
(16:14):
lot of times creditors willleave that off or the applicant
will leave that off of theirapplication.
And if it is, if that person isa junior and they live at home
with their mother and fathersame address, same zip code so
we can it can cause problems.
Speaker 2 (16:32):
All right.
Do I need a PhD to fill out acredit dispute?
Speaker 1 (16:36):
No, no, they're, they're, they're really easy.
Speaker 2 (16:39):
And on average and I know it's going to be a case by
case, but on average, how longdoes it take for somebody to get
feedback, for a consumer to getfeedback on a dispute?
Speaker 1 (16:49):
So when a consumer files a dispute with the credit
bureaus, we send the dispute tothe to the financial institution
.
They have 30 days to respond tothat dispute.
If they do not respond to thatdispute in 30 days, then that
information is removed from theconsumer's credit report.
Speaker 2 (17:09):
So I want to talk a little bit about the different
scoring models.
Can you explain how recentupdates with the credit scoring
models could impact individuals'credit profile?
Yes, so there's been.
With the credit scoring modelscould impact individuals' credit
profile.
Speaker 1 (17:18):
Yes.
So there's been some recentcredit scoring models that have
introduced changes to make amore accurate and comprehensive
picture of a person's credit.
So we've just recentlyintroduced trended data, which
analyzes credit usage andpayment patterns over the past
24 months rather than justproviding a snapshot in time.
So what is an example of thatis, a person who consistently
(17:42):
pays down their balances orreduces their debt over time may
see a credit score boost, whilesomeone who carries high
balances all the time and onlymakes minimum payments, they
could potentially see a scoredrop if they pay on time.
Some of the positive changesare responsible, long-term
credit habits are rewarded andthin file consumers folks who
(18:05):
have limited credit history theybenefit from broader scoring.
And some of the negativechanges the high credit
utilization and inconsistentpayments those typically will be
penalized more heavily.
Speaker 2 (18:20):
So you talked a little bit about paying.
You know paying your debt down.
How does paying down debt orreducing credit card balances
impact your credit scores,because sometimes I've seen
where it has a positive andsometimes a negative.
My daughter texts me just theother day because she paid off
her credit card and her scorewent down.
She's like Mom, what's going on?
Speaker 1 (18:38):
And it also depends what else is going on.
She may have paid that creditcard down but then something
else hit.
So your score is dynamic, it'salways changing.
So you're just because you havea 750 today doesn't mean you'll
have a 750 tomorrow.
So with credit scores, they'realways changing.
So it just depends on what'sgoing on at that point in time.
So with credit scores, they'realways changing, so it just
depends on what's going on atthat point in time.
(19:00):
So you know there are differentfactors that go into the credit
score payment history, creditutilization, length of credit
history, credit mix and newcredit.
So those are the different fiveitems that go into a credit
score.
Speaker 2 (19:17):
So can you explain a little bit what credit mix means
?
Speaker 1 (19:20):
Credit mix means that , making sure you kind of have a
healthy mix of credit, makingsure that you don't have 15
revolving accounts out there.
So you know, making sure thatyou have a couple credit cards.
You probably have an auto loan,maybe a mortgage, so you know
you're less risky if you have ahouse, a mortgage, an auto loan
(19:40):
and so forth.
But really the two key factorsthat go into the credit score,
that make up that credit scoreabout 65 percent, is payment
history, how you pay your bills,making sure you're not
delinquent, and creditutilization.
Speaker 2 (19:56):
The big two that I tell people all the time 35
percent is that payment history,30 percent is that credit
utilization.
That's over half of your creditscore, right there.
Sixty five percent.
So those are the two thingsthat you got to get right.
You got to pay your bills ontime, right?
Absolutely, you've got to keepthat debt low, that's correct.
So, tricia, if I've had a hardtime and I wasn't paying my
(20:19):
bills on time, now I'm straightand I'm paying them on time, but
I've got all these ugly remarkson there, that's not really a
dispute, but I don't like it andit's probably going to keep me
from being able to get credit orbuy that house.
So can I just call a creditbureau and say, look, you know
it's.
Speaker 1 (20:37):
I want to dispute this because it's going to keep
me from getting other credit.
Well, unfortunately you can'tdispute anything that's on your
credit bureau.
You're entitled to dispute it.
However, your creditor isprobably not going to look so
kindly to that.
If you were delinquent on yourbills, then it's their
(21:00):
responsibility to report that tothe credit bureaus.
However, you may call yourcreditors and you may kind of
work out a deal with them, butyou can't call Equifax and we
can't remove anything.
So I mean, if you call us, wehave to reach out to the
creditor and get the responsefrom the credit grantor.
Call us, we have to reach outto the creditor and get the
response from the credit grantor.
(21:20):
So if you dispute it and wesend it to the credit grantor
and they come back and say theywere never 30 days delinquent,
then we remove that obviously.
But however, if the creditgrantor comes back and says yes,
they were 30 days delinquent,then we have to leave it on
there.
So you have to look at thecredit bureaus, as we just house
the information so you cancontact us and dispute anything,
but we have to go to thatcreditor.
Speaker 2 (21:42):
Now I'm going to age myself, because way back when,
right here in Baton Rouge, weactually used to have a credit
bureau office and you know, anda consumer could go in and talk
to a person and, you know, getinformation, learn about their
credit.
And I heard you just in generalsay you know you would call
Equifax, but is there an actualcustomer service line?
Can a consumer get somebody,whether it's Equifax, experian,
(22:05):
TransUnion?
Can you actually get a human onthe phone or is it going to be
you're forced to do somethingyou know, like a chat online or
an email?
Speaker 1 (22:13):
You can actually get a person on the phone so you can
contact Equifax by phone, bymail, or do an online dispute.
So either of those, any ofthose three ways.
And, yes, I used to work at theCredit Bureau of Baton Rouge.
Speaker 2 (22:28):
So you're aging yourself too?
Yes, I'm aging myself too.
Speaker 1 (22:31):
I worked at the Credit Bureau of Baton Rouge and
we did have a consumerdepartment and we would have
lots of people come in anddispute items on their credit
report.
But, like I said, we had tosend that off to the credit
grantors.
There was nothing that we coulddo.
We were just different.
Speaker 2 (22:44):
We were just still convenient and I tell you we'd
love it if we could have thatservice back again.
So we talked a little bit aboutdisputes and I know you
mentioned that if the creditordoesn't respond in 30 days,
typically it comes off.
What if the creditor is, youknow, hey, this is legit, this
is staying on, or I'm not ableto get a resolution?
(23:06):
What can a consumer do then ifthey're not getting a
satisfactory resolution?
Right?
Speaker 1 (23:11):
Well, they can actually contact the creditor
themselves and try to talk itthrough the creditor, talk it
through with the creditor to seeif they can come up with a
reasonable resolution.
Speaker 2 (23:22):
Now the 100-word statement.
Whenever I am teaching a classon credit and I say that, I get
wide eyes like nobody in theroom has ever heard of the
100-word statement.
Can you tell us a little bitabout what the 100-word
statement is, and when should aconsumer use that?
Speaker 1 (23:39):
Well, consumers are entitled to put a consumer
statement on their credit reportif they would like.
A lot of times folks will putthat on there if they're maybe
going through a divorce and theyjust want the credit grantor to
know a little bit more abouttheir situation rather than just
looking at the trade lines, soit can show maybe a bigger
picture of what's going on intheir life at that time.
(24:01):
So you can put a hundred wordstatement on the credit report.
Speaker 2 (24:05):
Another statement or term that I see on the credit
report often is affected by anatural disaster.
How do lenders view anindividual's credit report?
What impact does that statementhave?
Speaker 1 (24:17):
Well, that statement, you'll see that a lot you know,
living in Louisiana withhurricanes that have hit.
You know Katrina for a matter.
As a matter of fact, you knowpeople were out of work, people
lost their jobs, so they wouldput that on there.
And a lot of times it's thecreditors that put affected by
natural disaster.
Because you may have a consumerwho's never been delinquent
(24:38):
before in their entire life andthen all of a sudden a hurricane
comes in and impacts them andthey're out of work, they can't
pay their bills, and all of asudden they're 30 days, then 60
days and then they're 90 daysdelinquent on an account and
they've never been delinquentbefore in their entire life.
So that kind of shows acomplete picture of what's going
(24:58):
on.
Speaker 2 (24:59):
All right, so, Tricia , so you know.
We've been talking a lot abouthow to improve your score, how
many accounts you should andshouldn't have, but what I want
to talk about, what are thetypes of accounts that are
typically on the report and thetypes that are not on the report
?
For example, I've heard a trendnow that you can add your rent
to your credit report.
Speaker 1 (25:17):
That is a trend and that's called alternative data.
So there we do have alternativedata sets that creditors can
get, such as rent income,employment.
So that's a trend.
That that's that's comingaround the pipe right now.
But a lot of times on atraditional credit report you're
(25:37):
going to have your creditaccounts, your credit cards,
your mortgage, your auto loans.
Now your debit card informationis not on there, but just
basically your creditinformation.
But, however, the alternativedata, we can actually get that
information and it's not goingto be on the credit report, it's
just on a separate report thata creditor can actually access.
Speaker 2 (26:02):
And can that help boost my score.
Speaker 1 (26:04):
Can that help me look a little bit better it can, and
that's all solely dependent onthe creditor and their
underwriting guidelines.
So you know, they may look atit.
Well, hey, they've been payingtheir rent and they've been, you
know, in this apartment forthree years and they have good
rent history and they pay theirbills on time, and so that may
give them a little bit of boost.
Speaker 2 (26:25):
All right If I have an 813 score.
Should I?
Is there something I should do?
Is it worth it if I want tohave an 850?
I'm a perfectionist, right, andI'm coming to you or I'm going
to a counselor and it's like Iwant to get an 850 just because
I want to live that perfect life.
Is there any reason that aperson should strive to get to
(26:46):
an 850?
And if so, are there anyparticular strategies that exist
for those top tier individuals?
No, for those top tierindividuals.
Speaker 1 (26:56):
No, and I laugh because people complain.
People will call and you know,my credit score is, you know,
815 and I can't believe it's solow.
And I'm like, oh my goodness,it is not low, that you have a
great credit score, Do not worryabout it.
So the factors that go intothese credit scores, they're all
proprietary.
So there's different algorithmsthat go into these credit
(27:17):
scores.
They're all proprietary.
So there's different algorithmsthat go into these credit
scores and nobody really knowswhat they are, and so I don't
know how to get you to have aperfect credit score.
Speaker 2 (27:29):
Then why are you here , Trisha?
Speaker 1 (27:33):
You know, if you pay your bills and you don't
overextend yourself, you'regoing to be fine.
Speaker 2 (27:40):
So let's talk about another sore spot, I think, when
we're talking about creditInquiries oh my goodness, you
know there's so many myths aboutcredit out in the world and I
think inquiries is definitely atthe top of the list, because
you have people that just theyfear an inquiry like the plague.
Talk a little bit, you knowabout what an inquiry is and you
(28:01):
know when should a person becautious about having too many
inquiries?
And then even the differencebetween a soft inquiry and a
hard inquiry, right.
Speaker 1 (28:09):
Well, inquiries do not hurt your credit score, like
a lot of people think they doso.
In the past they may haveimpacted the credit score, but
now they are much more consumerfriendly.
So when you're out thereapplying for credit, if you go
to neighbors and you open up acredit account, a credit card,
(28:30):
it's going to post a hardinquiry.
Speaker 2 (28:34):
And is that going to take my score?
Speaker 1 (28:35):
100 points.
No, it is not going to takecredit score 100 points.
Inquiries only impact thecredit score about 10 percent.
So the way inquiries work onthe credit report, inquiries
stay on there for two years butin the calculations of the score
it's going to only go back forone year.
So we only look at one year ofinquiries.
(28:57):
And the way it actually islooked at is that we group those
into groups.
So if you're out shopping ratesfor a credit card or a mortgage
, you're not going to bepenalized for shopping rates.
So we take those inquiries andwe group those into one for 45
days so that allows you time togo out and shop for credit and
(29:17):
not be penalized Because youknow if you go to an auto
dealership they're going to pullyour credit From.
Speaker 2 (29:23):
A to Z.
Speaker 1 (29:24):
Yeah, they're going to send it out to five or six
different lenders, well, thoselenders are going to pull your
credit report as well, but inthe calculations the score is
going to only look at it as oneinquiry.
The score is going to only lookat it as one inquiry, so as far
as it impacting your creditscore.
Speaker 2 (29:44):
That's not going to be why you're going to have a
bad credit score, exactly so.
You know, sometimes we havemembers that come in and say you
know, I had my credit pulledand it dropped, you know, 100
points.
And it's like let's look atyour report because more than
likely, there's something elsegoing on, absolutely, absolutely
.
And of course, you know it'ssad that, no matter what the
topic is, it seems like I alwayshave to bring up those things,
those red flags, those scams.
Are there any red flags orscams, things consumers should
(30:06):
be aware of, especially whenyou're vulnerable and you want
to improve your credit?
You know there's going to be somuch out there that says, hey,
come over here, we can do this.
There is going to be so muchout there that says, hey, come
over here, we can do this, wecan do that.
And then, a lot of times, thisstuff is just scams.
Are there anything, anyparticular piece of information,
you want consumers to know, tobe aware of, in terms of, hey, I
know you want to improve yourscore, but stay away from this.
(30:27):
Or if you see this, this isgoing to be a red flag.
Speaker 1 (30:30):
Well, there's no quick fix to fix your credit.
It takes time.
So if you've had some bumps inthe road and you have some
negative things that haveimpacted your credit score, it's
just going to take time.
So, as long as you catch up onyour obligations and you're
paying your bills on time, overtime, your credit score is going
to improve.
Avoid the credit clinics.
(30:52):
Everything that they do they'regoing to charge you for and you
could actually do it yourself.
So those are a big scam, I mean.
And they'll charge you five,six hundred dollars to dispute
information that you canactually do for free.
Speaker 2 (31:06):
All right.
So, tricia, there's somebodyout there listening saying my
credit score sucks.
It always goes back to college,right?
Oh, when I was in college and Ididn't know any better and we
didn't have financial literacyclasses, and so my score sucks.
But I'm ready to make a change.
Right, I need to get out of the300s.
I need to get out of the 400s.
I want to at least get to fiveor maybe one day eventually get
(31:28):
to a seven.
So if I'm that person and Ihave those skeletons of
yesteryear in my on my creditreport, where do I start?
What do I do?
Speaker 1 (31:38):
Well, first of all, I'd get a copy of your credit
report and I would actually seewhere the problems are.
And so if you had opened upcredit accounts when you were in
college and maybe they'recharged off, you may want to
reach out to those creditors andsee if you can come up with an
alternative to to make amends,you know, you know offer a
settlement and then start withsome of the credit builder
(32:02):
credit cards and just go fromthere.
Speaker 2 (32:05):
All right.
So, of course, the whole goalof this show and having you sit
down with me is to help ourconsumers, you know, reset,
refresh their credit and, youknow, start making things a
little bit better in 2025.
So what are your final tips forthat individual that says, hey,
that's me, I want to be able toimprove my credit score?
What are those key steps, keythings they need to be working
(32:28):
on or focusing on?
Speaker 1 (32:30):
First of all, I would say monitor your credit report
regularly.
Make sure you know what's onthe credit report you know.
Check for any inaccuracies.
Make sure it's up to date withyour most current information.
Don't just go in blind to acreditor's office and try to buy
a car or a mortgage you know.
(32:51):
Make sure you know what's onthat credit report.
Also, I would say pay down yourhigh interest credit cards.
That's imperative.
So pay those down first andthen also set up and maintain
online payments on time payments.
Speaker 2 (33:08):
Yes, definitely.
Speaker 1 (33:09):
You just want to make sure that you're paying those
bills on time and if you forget,like I do sometimes, you know,
go online and set up theautomated payments.
Speaker 2 (33:19):
Well, this is good information.
So what we're going to have youdo is come back in about six
months so that when we're allreviewing what those New Year's
resolutions were and you know,I'm going to do this, I'm going
to do that and hopefully many ofthose individuals out there
listening are actually going todo those things.
But they may get to a pointwhere it's like, ok, what now
(33:41):
I've moved the needle a littlebit.
What's my next step?
So can I get you to commit tocoming back in about six months
and we'll kind of do a refresher, see what new trends may be
going on with credit, or justkind of address those?
I've done those things.
I've opened up a new creditcard account, I've been paying
my bills on time.
What do we do next?
Sure, that sounds good.
All right, ladies, and gentlemen, you heard it because you know
got to make sure I can get herback in here.
Patricia, thank you so much forcoming by and sharing this
(34:02):
information.
Like I said, I think it's agreat way to refresh and start
the new year off looking at thatcredit, because it impacts so
much of what we do on a dailybasis.
Right Well, thank you, Iappreciate you having me.
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