Credit: Doing What You Say You Are Going To Do | Episode #427 | Encore Edition #232

Right Thinking with Steve Coplon | Guest: Johnnie Lloyd

This week's show is called "Credit: Doing What You Say You Are Going To Do" with guest Johnnie Lloyd.  Tune in and hear Steve and Johnnie continue their series Right Thinking: Life, Money, Relationships. One of the most important things that a person must do to have a healthy financial life is have good credit. This show will help you do that.

https://www.talknetworkradio.com/hosts/right-thinking

Episode Transcript

Speaker 1 (00:14):
There must be lies Parnon Brider somewhere. Got to be birds.
Why Hi the sky? Good morning, Welcome to Right Thinking
with Steve Copeland. I'm your host, Steve Copeland, and thank

(00:35):
you for tuning in. Let's have a great day. Good
morning everybody. Glad to be with you. Well. Today's episode
two thirty two Right Thinking with Steve Copeland is very
pleased to announce that this week's show is called Credit.
Doing what you Say You're going to Do with guests
Johnny Lloyd. Tune in in here. Steve and Johnny continue

(00:58):
their series Right Things, Life, Money Relationships. One of the
most important things that a person must do to have
a healthy financial life is have good credit. This show
will help you do that. Welcome morning, Johnny, thanks for
being with us.

Speaker 2 (01:16):
Great to be here.

Speaker 3 (01:18):
Looking forward to this because this could be very impactful
in every area of a person's life because there's so
much connected to their credit and building it, protecting it
as well as is make steps to make sure that
they have the best credit score and a head for

(01:40):
them because it impacts everything.

Speaker 1 (01:43):
It does. Of all the things that I try to
help people do, helping them have good credit is I
think one of the single most important things that I'm
involved in with people, because, as I said in the title,
without good credit, you're gonna you're gonna be struggling. You
need it, and we're gonna we're gonna talk about, you know,

(02:06):
why you need good credit, how you use your credit,
how to manage your credit. But let me just let
me just tell you a quick little story that I
think will get this started. So this guy, he he
he had a law mower. He needed to cut his grass,
and uh, his lawnmower was broken and he hadn't had
a chance to get it fixed, and so he, uh

(02:29):
he went over and he borrowed his next door neighbors lawnmower.
But the neighbor that lent him his lawnmower was just
a regular neighbor, nice guy, didn't know him really well,
so he lent him his lawnmower. Well, the guy cut
his grass, and when he finished cutting his grass, it

(02:51):
started raining and he left the borrowed lawnmower of his
next door neighbor in the backyard and he didn't take
it back. I mean, he didn't go out there and
get the lawnmower and clean it up and return it
to the neighbor and say thank you. After three days,
the man that had lent the lawnmower to the other fellow,

(03:13):
he was like, I need my lawnmower back. So he
went over and he knocked on the guy's door and
the guy opened the door and he was had a
beer in his hand. I mean, he opened the door
a real casual nonchalant said you know, hey, hey. The
guy said, hey, where's my lawnmower. You never brought my

(03:36):
lawnmower back? And as he took a sip off that beer,
he just went, oh, it's in my backyard. And the
guy that lent it to him said, what, it's sitting
in your backyard. It's been raining the last couple of days.
Did you leave my lawnmower in your backyard? And guy said, yeah, hey,

(03:58):
I'm sorry. Well, he goes in the guy's backyard and
he sees his lawnmar and you could tell that it
was already starting to have some rust set in from
being outside for a couple of days in the rain.
So he took his lawnmower back. And the sad part
about this story is is that the guy that lent
the other guy the lawnmar he never ever wanted to

(04:22):
see or talk to that guy again. Now that's about
the best that I can come up with for talking
about what credit really is. And I'm going to go
one step further. When I told that story to my
mother in law about six years ago, she goes, well,
you know, I had the exact same thing happened to me.

(04:44):
My neighbor across the street he borrowed a pruning saw
because he had some limbs to cut, and I lent
him my pruning saw, and then I realized one day, hey,
it's been about a month and he never gave it
back to me. So she went across the street. She
knocked on his door, and the neighbor answered the door,
and she said, hey, where's my pruning saw that I

(05:07):
lent you last month. He goes, oh, let me go
get it. Well, he went in his garage and he
came back to the front door with a pruning saw,
but it was not the same one. The pruning saw
that he tried to give my mother in law was
a yellow handled pruning saw and it had a little
bit of rust on. It was an old thing. And

(05:30):
she goes, that's not the one I lent you. The
one I lent you had a brown handle and it
didn't have that rust on it, and he kind of
argued with her a little bit, and so she took
what he gave her and left. But to this day
she's never had any kind of friendship or relationship with
that person that did that to her. Johnny, that's really

(05:54):
the basis of credit. It's when one let me read
you this stuff. That's not like any textbook anyone or
whatever ever. It's got multiple parts. You don't ever see
this in a textbook. This is my definition of credit
based on real life. Credit is when one person or
an entity does something for another person or that entity

(06:19):
with the reasonable expectation that the person that they did
something for will do what they said they would do
in exchange for what was done for them. Credit is
not just about money, that's part of it. Credit is
more about character, honoring your good name, keeping your commitment,

(06:44):
doing what you said you would do. Credit is when
other people trust you and are willing to do something
for you, to work with you, and give you opportunities
that would have a very difficult all the time getting
without help from others. Now, Johnny, I think that a

(07:07):
lot of people think that credit is a thing that
relates only to money, and can you go borrow money
or can you get your limit on your credit card
increased or whatever. But what I'm here to tell you
is that credit is about money, but it doesn't start there.
It starts with about a person's character. And the core

(07:31):
to the whole thing is when a person can trust
another person for what they said they were going to do. So, Johnny,
welcome to the lesson on credit that we're going to
try to help people know more about credit so that
they can use it to their benefit in their life.

Speaker 3 (07:49):
That's great. I like the definition that you brought up,
and it's directly related to character, right, because our character
goes beyond the obligation of signing our name to something.

Speaker 2 (08:10):
It goes deeper than that.

Speaker 3 (08:12):
So character would say that whatever I get from someone,
especially when I borrow it, like you said, with the
anticipation that I'm going to get it back, that they're
going to get it back, I would I step it
up a level personally because I go the extra mile
and say, not only will they get it back, they'll

(08:33):
get it back better. And so when and when I
say that, I'm saying, for an example, if a person
borrows someone's car, then if I borrow your car, and
what I do is I make sure that you have
a full take of gas when I give it.

Speaker 1 (08:53):
Back to you.

Speaker 2 (08:55):
So that's giving it back to you better.

Speaker 3 (08:57):
Number one, it doesn't have any dents, no scratches, no
living like that, right, And I haven't done anything that
I that you need to worry about while I was
in your car, because remember that it's it's linked back
to the person. So and that's the deal. The deal
is doing it better. So if you borrow, if you

(09:20):
get a loan, whatever, is trying to to build it
in such a way that they get their money back faster,
which may impact you having a lower credit, lower interest rate,
I'm interest rate, paying less an interest or whatever. But
it's with the anticipation of doing it getting it back

(09:41):
to them, and that requires some of the other things
that we've done, which is like you need to know
your budget, you need to know your numbers, you need
to know your cash flow, because just because you can
get something from somebody doesn't mean that that you have
the resources or you have the desire to give it

(10:03):
back to them in the same or great a better condition.
So you need to know where you are, to make
sure that you can be a person of your word,
to be a person of character and integrity, because that matters,
and not only does it matter to you, it matters
to everyone who's looking at you, whether.

Speaker 2 (10:26):
That be your children.

Speaker 3 (10:27):
If your children see you borrow the lawnmower from someone
and you leave it outside because you don't act like
you don't care about it, then don't be surprised when
you purchase, use your harder money and purchase things for
them and they leave it around like they don't care.
Because children do what they see, not what you say.

Speaker 2 (10:54):
So that's the deal.

Speaker 3 (10:55):
To connect it back to seeing and saying your word
and your action align to what you have promised so
that your character is elevated and not deflated.

Speaker 2 (11:14):
So that's what I would say.

Speaker 1 (11:17):
Good good. About seven or eight years ago, I was
in a prison and I was speaking on the subject,
and this gentleman raised his hand and he had a
lot of anger, and he said, I wrote a letter

(11:39):
to this service that was going to get me three
of my credit reports. There are services out there. We'll
talk about what credit reports are and why they're important
to look at every now and then. But you can
get a free credit report without it impacting your credit score. Whenever,
whenever somebody looks at your credit score and does an inquiry,

(12:03):
it lowers your credit just a little bit. Because whenever
you're getting ready to take on new credit or have
have have someone check your credit, it can lower your
credit score just a little bit. And that's okay, a
few points here and there. It goes back up in
a couple months. But there are services out there that

(12:25):
you can get a look at your credit without having
to have it lower your credit score. It's you know,
like you can get like a copy of your credit
score once a year, and there's a service that you
can get. There's three credit agencies out there, Equifax, Experience,
and TransUnion, and they all are very similar. They all

(12:49):
use a little bit at a different criteria algorithms, matrices,
et cetera to study your credit and you know, like
the world's one real big computer database and everything you
do kind of gets recorded somewhere. And so these three
are the major services that give you your credit score, and

(13:12):
they are all are very much in line, but one
of them might be a little higher a little lower
than one or the other two. Well this gentleman. He
raised his hand and he said, I got one. I
wrote the letter that I was supposed to request that
I needed to write to get my three credit reports,
but I only got one. And he said, how can

(13:33):
I make the other two services send me my credit report?
And I said, well, let me ask you a question.
And he was very very angry. And he was very
typical though, because people say you're supposed to be able
to get one thing, and they want what somebody said
they give them. So this guy was on the right

(13:54):
track saying somebody didn't do it. They said they're going
to do the service. And I said, was the credit
score that one report that you got? Was it real low?
He goes, oh, yeah, it was ridiculous because I've been
in prison a couple of years, and you know, I'm
not paying any of my bills, so his credit was
really really low. And I said, well, let me say this.

(14:19):
The other two you don't really need them because they're
going to be more of the same. You already know
that your credit is a really low place. And yeah,
they should have sent me the other two. I don't
know why they didn't, but let me just tell you this,
if you want to rebuild your credit now being in prison,
he didn't have incomes. That would be kind of hard

(14:40):
for him to rebuild it while he was in prison,
but there were things that he could do. But for
anyone listening, if you already know that your credit is really,
really low, then what is it that you should do.
What you should do is start today. Everybody hears that
try cliche, today is the first day of the rest

(15:03):
of my life. Well, you've got to start sometime. And
the sad news is it didn't. Your credit didn't crash overnight.
Rome was not built in a days. What I'm trying
to say it took you a while to destroy your
credit and it's going to take you a while to
rebuild it because they don't want you just to get

(15:26):
an inheritance from somebody, pay all your bills off, and
then all of a sudden your credit is going to
be at the highest level because they know that's not
your personality, just because you had a windfall where you
could get it restored and pay all your bills and
keep them current. Keeping your bills current is just one
aspect of credit. But the lesson with this gentleman that

(15:46):
wanted his other two credit scores. He didn't like what
I said, but I gave him the truth right between
his eyes, and that was you don't need those other
two reports. You already know you have very bad credit.
And my advice to you is if you start doing
what you say you're going to do, if you start
honoring your good name and start paying your bills on time,

(16:10):
you will have good credit. Over a period of time.
You will be able to rebuild restore your credit by
simply doing what you say you're going to do. So, Johnny,
that's the next part of this conversation that I want
to launch into. When when a person does not have
good credit, what are some of the ways that you

(16:31):
would suggest to them that they can improve their credit?

Speaker 3 (16:36):
Okay, so one of the ways that they improve a
credit is that they that they do what you said,
pull your credit history right. And one of the ways
you can do that is go out to the website
and get your free and I said free fr EE

(16:57):
credit report. And you can get that report annually from
all three credit rurals that you just mentioned and so.

Speaker 2 (17:06):
Report. The website is.

Speaker 3 (17:09):
Annualcreditreport dot com, So if you go out there, you
can get it.

Speaker 2 (17:14):
So that's the first thing, find out where you are.

Speaker 3 (17:16):
Because you don't know where you are, you don't know
how to move forward.

Speaker 1 (17:21):
Right.

Speaker 2 (17:22):
So then when you look at.

Speaker 3 (17:25):
The credit report, then you start looking at the greatest
thing that you can do to impact it. The fastest
is look at your payment history. Because thirty five percent
of your credit report is made up of your credit history.

Speaker 2 (17:44):
So because you look.

Speaker 3 (17:45):
At your credit history, and history is how many on
time payments have you made? So that's the history, right,
It's about your character. How many times have.

Speaker 2 (17:55):
You done what you say it you were coming through
is what the history is.

Speaker 3 (17:59):
So they put more weight on that than anything else
related to your credit. So when you look at your history,
remember this, and I'm gonna use a great example. There
are things that happen in our life that could call
that we're in crisis. Right, So when you find out
that there is an issue, because this is about you

(18:20):
improving your credit score, right, So what you do is
when you find out there's a problem.

Speaker 2 (18:25):
Don't hide hid don't hide away from them.

Speaker 3 (18:30):
They know the payment is due just like you do.
So eliminate your stress. Contact the person that you said
you were going to pay, and re establish a payment plan.
When you re establish a payment plan. What happens is
they can't report you as late because they reasset re

(18:55):
establish a payment plan with you. So then that is
the deal, So you have to stay with the new
payment plan. That's one of the things you can do.
The other thing is if you're looking at and let's
say you have I don't want to say a great
credit score, but you know you're out there and you
need to do something. You need to whether it's consolidate
or whatever. We're going to talk about that later, but

(19:16):
you need to do something right now.

Speaker 2 (19:18):
Then remember that if.

Speaker 3 (19:20):
You are searching for the best credit rate, if you
do that within a thirty day period, you only get
one hit from the credit report.

Speaker 2 (19:32):
If you do it all of it.

Speaker 3 (19:33):
And it's the same type of let's say you're looking
for a loan, so for Carlo, so if you do
four or five inquiries that you don't get a ding
for every single one. The credit bureau is now a
setup so that you get one ding for all of them,
but it gives you a chance to be empowered to
get the best rate based on your score. Then, using

(19:58):
the same example, if you find out your score it's
really really low, One of the things you might do
is say, let me wait for sixty ninety days and
see what I can do, because remember you pulled your
credit report, so let me look at sixty and ninety days.
If I can put off that purchase and then build
my credit score a little bit so that I don't

(20:20):
have to pay us a higher interest rate.

Speaker 2 (20:22):
Those are things you look at.

Speaker 3 (20:25):
Another thing is if you're making the purchase and they
offer you no interest for a period of time, if
you cannot make the payments and pay off that item,
you might not want to consider that because remember they
go back to the beginning and.

Speaker 2 (20:43):
They charge you interest.

Speaker 3 (20:44):
So that's a big thing that you can end up
causing yourself some trouble. So the next of the next
thing you need to do to impact your credit score,
To go back to Steve's question, is you look at
the length of time that you've had the credit So
I'm going to give you a really major tip. If
you have had an account open since let's say two

(21:06):
thousand and two, and you've had this credit card for
since two thousand and two, but you want to you
want to no longer use it, you can you can
not use it by cutting up the car. You don't
have to close the account because then you impact your
credit how your length of time that you've had credit,

(21:29):
because they'll.

Speaker 2 (21:29):
Take it off.

Speaker 3 (21:30):
So consider how long you've had the credit established.

Speaker 2 (21:36):
Even though you desire not.

Speaker 3 (21:38):
To use the credit card or the credit anymore, you
may leave it open. There are some dynamics based on
what it is, but you may want to leave it
active even though it's not being used.

Speaker 2 (21:51):
So consider that.

Speaker 3 (21:53):
And then the last thing that I'll give as a
tip is when you have let's say, and I do.
I have a a home depot card because I do
investment property. I haven't used it in a few years,
so they just dropped my.

Speaker 2 (22:10):
Credit limit.

Speaker 3 (22:12):
So when you look at how much you owe versus
what the limit is, it is a ding. When I
say ding, that's a negative against you.

Speaker 2 (22:24):
When you're available.

Speaker 3 (22:25):
Credit, let's say is one thousand dollars and you have
it and you max it out, that's a ding against you.
So you want to always have available credit that you
can use that you're not using because you know what
they say, that means you have self control and you're

(22:45):
not maxing all of your credit that's available to you out.
So consider those things as you move forward, because it
makes a difference because they do look at your capacit
city to pay, they do look at what type of
credit that you owe. But if you're looking for immediate,

(23:07):
immediate injection of increasing your score, the best place to
get that injection is looking at your payment history. And
if you see things on your credit report that are
not true, remember that the credit bureau will help you clear.

Speaker 2 (23:27):
Those things up.

Speaker 3 (23:28):
You don't necessarily have to pay somebody to do that.
And there's a lot of companies that are that will
help you, right And I'm not saying don't use them.
I'm just saying if finances are an issue, but you
need to handle the problem, then get the people that's
in the business to help you and move forward and

(23:51):
move forward in a positive sense so you can get
those things removed from your credit history.

Speaker 1 (24:00):
See oh it more than helps. That. That was very good, Johnny,
Thank you. That was That was a lot of information.
I want to go back and dissect it a little
bit for a second here. So what we've brought out
as far as having a good credit score, you also

(24:20):
what I'm trying to say is we kind of skipped
over one thing that I that I wanted to do.
Before we go any further, why let's give a little summary.
Let's go like we do sometimes back and forth and
give give a very good reason why it's important for
a person to maintain to have good credit, not maintained,
of course, we want to maintain it. But let's talk

(24:42):
about the fundamentals of why a person to have a
healthy financial life needs to have good credit. What's what's
one reason. Let's just go back and forth. What's one
reason a person really needs to have good credit to
be stable? More stable in their.

Speaker 3 (24:57):
Life the interest rate changes.

Speaker 1 (25:02):
Okay, I'm going to go more fundamental. They need it
for an emergency. If they don't have any money, something's
happened and they have some kind of a crisis or
an emergency, and they can't have money in their bank
account that they can use or a savings account. There's
lots of emergency crisises that a person may have to

(25:22):
use credit, and so you need to have credit available
to you for emergencies. The simples one I can give
you is is that you don't have any money, Your
paychecks another week and a half off, your car breaks down,
you need your car to get to work. You might
want to be you might have to charge the repairs

(25:43):
so that you can keep working. What's another one every
one want to be.

Speaker 3 (25:50):
I'm gonna say protection, And let me explain. Protection is
when you go on a site, if you have good
credit or a credit card, you want to use the
card to go on the site to use, not your
debit card. And the reason for that is when it's
a credit card, you can immediately dispute it, whereas with

(26:11):
a debit card, the money weleep comes out of your
bank immediately, so there's a different process and it takes
longer for them to put the money back in your account.

Speaker 2 (26:22):
So I'm going to say for protections.

Speaker 1 (26:25):
That's a great one. I want to go back to
the differences between a debit card and a credit card,
because one of the worst things that I have not
enjoyed in the way society has moved forward is that
you cashless. Society used to be that if you're a
farmer and you build a whole lot of cash under
your pillow, maybe you're not making interest in the bank,

(26:46):
but that's okay. There's not any interest being paid down
from a bank anyway. Savings account and bank's not even
getting one percent anymore, I don't think. But if you
are a cash basis person to where you don't like
to use credit cards for spending because they'll get you
in trouble, and we're going to go really heavy and
how credit cards can get you in trouble toward the

(27:08):
end of the show. But if you have cash and
you can pay as you go and not incur any debts,
that's a nice place to be. But in today's society,
they don't even accept cash in some drug stores or
pharmacies anymore. During the pandemic, their signs on the thing,

(27:28):
you know, credit card only, no cash. It's like, are
you kidding me? They're making people use credit because they
don't they don't want to have the transaction have to
go through the bookkeeping and making deposits and all that stuff.
So they have the ability now for people through a

(27:49):
debit card to just act like it's cash. But they're
using it left and right, and they're not looking at
their statements to see what they're spending their money on.
We talked about that in some of our earlier chapters.
So it's very dangerous when people are just giving people
a piece of plastic and buying something because they're losing
track of it. But you're exactly correct. For protection, I

(28:10):
want to tell you, okay, the next one why you
need credit, Well, if you want to, if you want
to buy a house, you certainly aren't going to be
able to get a mortgage without having good credit, you know,
because a mortgage, when you buy a house or buying
a house, is an expenditure that costs multiple, multiple future

(28:32):
years of your earnings. And a mortgage company will allow
you to buy a house with the money that they
loan you, money that you could not have accumulated for
years to come. And so if you'd rather own your
own house instead of paying rent somewhere, you got to

(28:54):
have credit. Period, You must have credit if you want
to own a mortgage, own a house through a mortgage.
What's another one?

Speaker 2 (29:02):
If you want to rent, and let me say that
you said own.

Speaker 3 (29:06):
However, it impacts your rental because they run your credit,
so they look to see what your payment history, what
your character is, and that's one of the things that
helped them with the not how necessarily how much they
charge you. However, it does impact you renting from that organization,

(29:28):
for that company or whatever, because they say your higher risk.

Speaker 2 (29:33):
And so another one, if I may jump in, is insurance.

Speaker 3 (29:36):
Your insurance premium, they look at your credit score and
that is a factor in your insurance premium. So keep
that in mind. That makes a difference. Steve very good.
So we've covered some of the basics for why you
need to have good credit. You mentioned that you're required

(30:00):
have credit to make major purchases like mortgages and things.
But once you have credit, if you don't have good credit,
the rates that you pay on loans and other things
is significantly higher because the risk to the lender is higher.
So this system of keeping track of your credit through

(30:20):
the credit agencies that I mentioned, those the three major
ones Equifax, Experience, and TransUnion.

Speaker 1 (30:30):
It's a very very reliable system that's accurate. They do
make mistakes though, where sometimes you pay a bill off
and it doesn't come off your credit and it shows
that you've got this bill outstanding for a long time. Once,
probably about thirty years ago, my credit was a little
lower when I checked it than it should have been.

(30:50):
I didn't have any issues going on, and I found
out that there was a bill that was sitting on
my credit that had been fully paid. It wasn't ever
a problem. But it showed up that on my credit report,
and I wrote a series of letters. It took me
three letters. It finally came off of my credit were
popped up fifteen or twenty points just that one incident

(31:13):
happened to me. But so.

Speaker 2 (31:17):
Let me if I may jump in for just a second.

Speaker 3 (31:20):
One of the things that impact everybody is utilities. Right,
that's a major thing. So when your credit.

Speaker 2 (31:32):
Is not.

Speaker 3 (31:34):
Is problematic, let's call it that problematic. Then what happens
is not only do you have to is your utilities impacted?
How much you have to pay or maybe a deposit
is an issue. It becomes an issue because your deposit
that they may keep could be higher. So you're costing

(31:54):
yourself not to be a person of character. And again
it's very important. And the other thing that I'll say
is in every situation is different. I started my daughter
off at sixteen with credit. Before sixteen, I started her
off with credit. And the reason I started her off

(32:14):
with credit number one, she was in my home so
I could track it.

Speaker 2 (32:18):
Number two, I was a person who was responsible for it.

Speaker 3 (32:22):
Hello, I was responsible too, but I wanted to see
how she would manage in my home. And I gave
her parameters as to how she could use the card,
like Steve said, emergencies if she was on the road,
because she was driving. So I wanted her to have
a credit card where she could do anything she needs
to do. She had triple a Hello, but she also

(32:44):
had a credit card if she needs to do something,
because I didn't want her stranded. And so look at
that as a parent, to teach your children how to
be more conscious of their character through building at it
while they're with you, and it will help you stay
engaged as well.

Speaker 2 (33:04):
Just a just a tip. Thank you Steve.

Speaker 1 (33:07):
That's that's very good example. I want to take the
same one one of my one of my sons, when
he was in college, I wanted to help him establish credit. Also,
you know everybody when you how do you get credit?
People ask, oh, when you graduate high school, go to
your mailbox. They're going to have fifteen applications where credit
card companies want to they're not even applications. They send

(33:29):
you the card with a starting balance of three hundred
or five hundred dollars and they want to get you
on their credit card. You don't have to even look.
It's in your mailbox. But you got to be careful,
and we're going to talk about that. That's how we're
going to kind of end the show today is what
I call the credit card trap. But so my son
I wanted to establish credit for him, and and here's

(33:52):
here's a technique that everybody can do if you are
already a parent that has credit to help your children.
I took him to my bank and I co signed
a loan for him for one thousand dollars, and we
put the money into a savings account. There was some

(34:12):
type of a checking savings account. And we spent eighty
dollars to do what I'm going to tell you. So
the question you have to say, is is it worth
eighty dollars to establish credit for someone? And the answer
is I think it is, because you're going to spend
more than eighty dollars in finance charges and late fees
once you get that credit card. Anyway, if if you
don't know what you're doing. But anyway, he went to

(34:35):
the bank with me, he signed the note for one
thousand dollars loan. I co signed it for him. We
simultaneously opened up a bank account. We set it up
so that there would be automatic payments over a twelve
month repayment. So we made it one hundred dollars deposit
and it cost us eighty dollars to pay off the
one thousand dollars in twelve months. And at the end

(34:58):
of the twelve months, Hey, I helped my son. And
sometimes your kids don't even know what you're doing for him.
He didn't even remember that we did this until I
had to remind him, because he never saw anything about
it again. But he had credit on his credit report
that he had taken out a loan from a bank,
and he paid twelve payments till time and satisfied the
whole loan. And he went from just modest credit that

(35:21):
you start off with to exceptional credit because he had experience.
Now he had a track record established, and he didn't
even hardly know that this had happened. But once we
went to the bank that day, we didn't have to
do anything else other than open the mail and get
the return satisfied loan document. A year later that he
had paid off, he had a nice thank you letter

(35:43):
from the bank. That's a form letter. Thank you, mister Copeland.
Josh Copeland is my son that did this. He said,
thank you, mister Copeland, you know you have satisfied the
terms of your loan, and here's the note back. You
know fully satisfied. But he had great credit from that
day on and I'm proud of him because he's kept
his credit good. So that's one way that you can
help your children establish credit and without costing very much

(36:07):
money at all. Well, Johnny, you gave me a thought.
While you were given a lot of your reasons on
why you need to have credit, with communication the number
one thing that you can do. Because we're all going
to fall into hard time sometimes, we're all going to be,
unfortunately in a position every now and then in our

(36:28):
life that we have a problem paying our bills on time.
So how do you keep good credit? First of all,
honor the terms, pay everything on time, Pay everything on time.
But there's going to be places in your life where
you don't. You can't. Something happened. You know, you're at

(36:51):
an accident, you're in the hospital or whatever. You know,
you had an emergency. So what do you do. You
communicate to your creditors. You call them on the phone,
you speak to them and you say, Hi, my name
is Steve, and i'd like to talk to you about
my account because I'm having a medical problem. I'm having whatever,

(37:16):
the situation I've gone through, divorced recently, whatever, Well, I
want to tell you one quick story. I with all
my medicals. I've been smashed by medicals. We're going to
do a whole show on the effective medicals and having
proper insurance in a couple of weeks. But every time
I would go to the cancer doctor, I would get

(37:37):
three to four bills from various things. I go to
the doctor, I got that bill. I've got lab work
that has to be done. Sometimes i have X rays, whatever,
there's prescriptions that are involved. Well, they did these x
rays and I was struggling, and I had this company,
I think it was lab Core. It's a national company

(37:58):
that does you know, lab work. And over the twenty
years of fighting a terminal illness that's incurable, I have
a lot of bills and I've been on payment plans
with lab Core a couple times because my bills get
caught up. I just look at my cash flow budget
I projected out, so I know that I'm not say
by being proactive and seeing that you're not going to

(38:20):
have enough money coming up in the next month to
need all your obligations. Don't just ignore it, make the call,
let them know. And so I called lab cor Up
because I knew that I was going to be short
next month and I needed to figure out where can
I save a couple hundred dollars of what my outgoing
cash looks like and keep my credit straight. I have

(38:42):
managed my credit closely like this for years and years
because I have very difficult circumstances that require closely monitoring.
So I called lab cor Up, and my purpose was
to call them up and say, I'm going to have
a hard time making my payment. Can I you know
you can always get an extension if you If you

(39:02):
tell your story, some people will do that. And the
key here is keep it in house, keep it with
your creditors so that they don't take it to collections
outside of their company. Because whenever you're doing an in
house agreement, it doesn't show up on your credit report.
But if you ignore it and say, well, I know
I can do about it. Just I know most people

(39:24):
I can't pay it. I can't pay it. What am
I supposed to do? They get angry. What you're supposed
to do is call them up and communicate. But this
one woman that answered the phone that day, she was wonderful.
I said to her, Hey, I'm having a really hard time.
I've got you know, I've got a new client that's

(39:45):
going to start next month. I'm going to have my
money coming back. Okay, next month, I'll be okay. Or
whatever my situation was, or I might have just had
a surgery or something and been down for a couple
of months, because I've had a lot of surgeries. She said,
mister Copeland, I'm looking at your credit history with us.
You've been working with us for sixteen years. The lab

(40:06):
Corp has been with me ever since my cancer diagnosis
twenty years ago. So she said, you've been paying bills
with us for sixteen years. And she said, you've got
a great track record with us. You know, you've been
on a payment plan a few times that you've met
all the all the terms. So you're asking me, can
you skip a month and pick back up. That's that's

(40:28):
an easy technique to skip a month. As long as
the market in your in your account, they'll give you
a little break. Now, that doesn't mean double up next
month and make two payments. It means skip a month.
There's other times that you offer to double up. I'm
going to get a lot of money in next next
two weeks, I can make this month's payment and next
will that be okay? They go, We'll be glad to

(40:49):
do that. But better is to skip a month because
that keeps more money to do other things within your bank,
in your in your account. So she said, would it
be okay if I give you three months and not
just the one you're asking for, because you know you've
done great with us over the years. I know that
you're fighting an illness, and would it help you if

(41:11):
I just don't if I put it on your account
that we're gonna let you go for three months and
then you pick up your payments starting on the fourth month.
Well I almost cried, to be honest with you. It was
so it was a powerful emotion for me because the
woman was so nice. And I'm going to end that
part of my little antidote with this. I developed a
phrase maybe six or seven years ago when the economy

(41:35):
was starting to get rough. You know, everybody used to say,
when you want to connect with other people share similarities, well,
you know we're all in the same boat. Well I
changed that phrase we're all in the same boat, to
where I say, you know, we're all in the same
arc because this world is going through so much stuff,

(41:57):
particularly now with the worldwide pandemic that we've been going
through that I like to say it's some biblical proportions.
We're all in the same art and if we don't
try to help one another, we're going to have a
hard time. So just remember this. Do not be afraid
of your creditors, the people that are working those administrative jobs,

(42:20):
those clerical jobs, the people that are answering the phone,
those people that are paid to call you up and
push you to make a payment. Whatever those people are,
they're going through the same thing you're going through. They're
human beings too. They have families, and if you call
people up and you are kind and nice and don't

(42:41):
show your anger and lash out at them, most people
that you call will do everything within their power to
help you because they can relate to you because they're
going through the same thing. A lot of these collection
agents that are calling you, these people that are calling
you up saying we need to make a payment, and
they try to push you into an agreement. That's just

(43:03):
their job. They don't want to have to do that
to you. And if they're pushing you too hard, ask
to speak to their supervisor, because the supervisor has more
authority to work out a plan. The first level of
the phone call. Sometimes when you call to communicate will
not be well received because that person gets paid a
commission for the amount of collections that they're making, and

(43:25):
so keep that in mind. So my advice on the
communication component of what you said, Johnny, is this, don't
wait until you get too far behind, or don't wait
till you fall behind. Call while you're still current, knowing
that you're getting ready to get behind. If you don't
get some help here, ask for help, they'll give it
to you. Don't yell, don't be angry light and if

(43:50):
they don't give you what you're asking for, they might
not be able to. So ask to speak to a
supervisor before you lose your temper on them, and just
remember my sure they will help you if they can.

Speaker 3 (44:05):
That's the powerful Steve. A matter of fact, I love
that statement because sometimes, like recently, I had some medical
work done and they sent me a bill.

Speaker 2 (44:16):
You know, they send you alum sum.

Speaker 3 (44:18):
So when that happens, when you look at your cash
flow and you know that there's not a way for
you to pay it. Don't let the first thing you
do is to swipe a credit card. Don't let that
be the first consideration. Make arrangements with them to pay

(44:39):
them so that it fits within your plan. Make arrangements then, right,
don't wait until it's due and now they're calling you
or you put it on your credit card knowing you still.

Speaker 2 (44:53):
Can't pay it. All it did was shift it for
another thirty days. Right, don't do that.

Speaker 3 (44:58):
Look at it and say, this is a medical this
is my You know, you may not have met your
copay and your copay may be pretty expensive, and I
know that we're kind of tapping into insurance but at
the same time, or medical but at the same time.
I think is the perfect time to give people options
based on what you lifted up because it's so true.

(45:21):
And look at the character. Look at the example that
Steve has laid out his character over the years provided
him favor.

Speaker 2 (45:33):
This lady saw the.

Speaker 3 (45:34):
History when we talk about credit history with the organization
and said, no, we can do this for you if
it's okay with you. Of course, it's okay with me
for me to do that because it puts you in
the position that you're the one that's making the decision.

Speaker 2 (45:51):
So when you get a bill for.

Speaker 3 (45:53):
Something that is unanticipated, like medical or something like that,
make arrangements.

Speaker 2 (46:00):
Then make arrangements so it fits.

Speaker 3 (46:02):
If you know you can't pay one hundred dollars a month,
don't make that be your plan.

Speaker 2 (46:07):
Tell them no, this.

Speaker 3 (46:08):
Is how much I can do, and then be a
person of your word, because so many times when companies
take what you owe them and they have to turn
it over to collection agency, they only get pennies on
the dollar.

Speaker 2 (46:23):
They don't get the whole amount that you owe them
that you owed.

Speaker 3 (46:27):
So that's why turning over collections can really negatively impact
your credit score as well, because the company did not
get remember the lawnmower episode, when he got his on
war back, it wasn't what he gave him. So there's
some dynamics that happened with that. So the deal with

(46:47):
it is make arrangements in advance. The key is you
knowing what you have in your hand and what you
have every month going out and then looking at the
new bill that came in and saying this is not
going to fit in that So now I need to
make arrangements so I can be a person of my word,

(47:11):
and this is what we're what we're asking for. And
like Steve just wonderfully alluded to, if the person that
you get on the phone is not in agreement with that,
or they say no, no, no, it has to be
let's say you said fifty and they said no, it
has to be one hundred and fifty. I'm sorry, can
I speak? Can I speak to your supervisor? And just

(47:31):
like I just said, it really nice, I'm sorry, can
I speak to your supervisor? Because I'm not going to
make arrangements that I know I can't, I can't meet
and I want to be a person of my word,
so I can I speak to someone else? And then
you know what, they'll do one or two things. They'll
call a supervisor, which is cool, or they'll say okay,

(47:52):
well you know, okay, let me see what I can
do for you. Not people put you on palls, but
you're really not on palls. I mean, they put you
on pause.

Speaker 2 (47:58):
But they already had the power to do what.

Speaker 3 (48:00):
You wanted them to do, but they didn't want to
do it, or they're not that is not their first
answer because they've been trained to get their money as
soon as possible.

Speaker 2 (48:11):
Keep that in mind, but you keep your control because
you you hard.

Speaker 3 (48:16):
What we're teaching is for you to know what you
have and for you to work within your means.

Speaker 2 (48:23):
They're not okay, go ahead, I'm sorry.

Speaker 1 (48:25):
Oh no, no, I didn't mean to interrupt you. I
got no.

Speaker 3 (48:29):
And then that you not add stress undue stress to
your life, or you don't break your budget because you're
trying to do something that you know didn't work in
the beginning. And definitely don't put it on a credit
card unless you can pay the credit card off immediately
because you don't want to do that.

Speaker 2 (48:47):
Go ahead and see, thank you.

Speaker 1 (48:49):
Oh no, I didn't mean to interrupt you. You were wonderful.
So two things real quick. You say so much and
you get like five or six things out there, and
I have something to contribute on five of them or
full of them. But here's two that I want to
pick up on. One is it's true. The reason that
they will set up an in house payment plan with

(49:09):
you is because it costs them a whole lot less
money because once they give that counter a collection agency,
that's how the collection agenty makes their money. So they
basically said, we ain't going to collect this, We'll just
get some pennies on a dollar here. But if you
keep it in house, it's good for you because it
doesn't go on your credit board, but it's way better

(49:31):
for them because they're going to collect the full amount
and not have to pay the lawyers and the collection agencies.
So they want to keep it in house with you.
Don't ever forget that, no matter how hard they push you,
they want to keep it in house because they make
a lot more money from you. They might not act
like that when they're being hard on you. Second thing,

(49:52):
when they're being hard on you, here's a standard conversation.
That is what they're trained to do. They have the script,
they go after it, and you really said it. They
know that they can do something, but they're not going
to let you know that. Here's what it is. And
on your cash flow, Johnny, I hope that people have
paid attention to see how when you really know how
to handle your cash flow and see ahead of time

(50:14):
when something's going to be happening, it will save you money,
it'll it'll keep your credit straight, it'll give you so
many options. But people just shy away from it because
it takes a little bit of effort to stay on
top of it. Yeah, but in the long run, your
life's going to be so much cleaner and straighter. Your
character is going to shine. But here's one example that

(50:34):
is a real example. Let's say that you owe four
hundred dollars to an account that you haven't been able
to pay. Whatever it is, you man some kind of purchase,
you know, your own payments, and you call up and
they are threatening that they're going to take you to collections,
and you want to keep it out of collections, but
they want their money now, and so the terms that

(50:57):
they give you is the best that you can do
in this conversation is they'll say, okay, we'll take one
hundred dollars now, will you pay us one hundred dollars
while we're on the phone, and we'll let you make
three more payments. Well, the math on that is tricky
that most people don't see. That is not four monthly payments.

(51:21):
That is your income that you have to work with
in three months, not four. So let's look at it
day one right now on this phone call. To try
to work this out to protect your credit, they need
one hundred dollars. So on day one, one hundred dollars.
Thirty days or thirty one days later, the first of

(51:42):
the next month, they want another one hundred dollars. So
at the end of the second month, they want another
one hundred dollars, and at the end of the third
month they want another one hundred dollars. So because you
had to pay one hundred dollars up front, not the
first payment to start in thirty days, is you're going
to have to pay four hundred dollars in a three month,

(52:05):
one day period. Now, your income might not be able
to handle for one hundred dollars in three months to
equal to four hundred dollars. In other words, my point
is this, do not agree to any terms of a
payment plan that you number one, don't fully understand. In

(52:27):
number two, if you if you really can't do it,
don't agree to it. And so if you don't, look,
we're going to cover you know next week. What we're
going to have to do, Johnny, is next week we're
going to talk about debt extensively, about managing your debt,
and we're going to get into debt consolidation. We're going
to get into all these things relating to debt, and

(52:49):
so I'm going to hold off on my example, but
this be careful that you don't have somebody force you
to do something that you can't do, because if you
agree to terms you can't do, you're going to cave
in anyway, and then you're going to be in worse
position than you start it because you won't be able
to go back to the well and do it again.

(53:09):
I want to give one real quick example about credit.
I learned a very valuable lesson that I hope everybody
can learn from this. When I was in college, we
used to have a thing called a signature lane where
you know, college kids, they got unlimited They want to
tap into your future income, so they give you credit
without having you do much of anything. You just go

(53:30):
in and get you get money. So I borrowed a
one thousand dollars from a bank and the banker name
is it United Virginia Bank in nineteen seventy four and
Richmond at VCU, and her name was Carol Wheet, and
she was the bank officer, the manager at the branch
right there at college at BCU and Richmond. And I

(53:55):
won't go into the whole detail but I borrowed a
thousand dollars and it was an eighteen month loan at
sixty one dollars the month, and I set aside I
didn't even have a job, but I was. I used
the money to take a trip and anyway, I put
three months of payments one hundred and eighty three dollars aside,
so that I knew that I could take this trip.

(54:16):
I was trying to set up a business. I won't
go into more detail, but I set aside I used
eight hundred and sixteen dollars of the thousand, I put
one hundred and eighty three in the bank so that
I could have my first three payments made on this
loan to keep my credit straight. Well, when it came
time to the fourth month, I still didn't have a job,

(54:38):
and I went back to her and I said, I said, hey,
I haven't got my job yet, but can I get
another thousand dollars? And she said, well, Steve, let me
just say this to you. I would have lent you
two thousand on day one. She said, you know, because
your credit was wide open then. And she said, but
because you only asked for a thousand, and I can't

(55:02):
loan you anymore until you pay off the first thousand.
So the lesson there is very important to me. I
learned it by the way she sent me to a
client to do bookkeeping for so that I could have
money to pay off a thousand. And it was a
great relationship for me to start working closely with bankers
to send me to their clients to help them get
their books straight. And so that's a big part of

(55:23):
my career. But here's the lesson again. I borrowed a
thousand before it was time to I need it. I
needed to borrow more before I had paid it off,
and she taught me the lesson know the full amount
that you think you're going to want to get because
once you once you draw on your credit, you have

(55:45):
to pay it down with a bank before they'll let
you up it again. And so there's there's certain circumstances
where you might be able to get more if you
have collateral or coasteiners or things like that. We'll talk
about that next week. But my point is that was
one of the greatest lessons and finance that I've ever
learned for credit was because she said, see, I would

(56:06):
have given you the two thousand instead of a thousand,
but I didn't know that I was going to need
any more money after the first thousand. So just remember
that when you do your budgeting and your finances and
you try to do your consolidations, like, well again next week,
we'll do that, Johnny, Do you have any other things
that you'd like to bring up as they were, Oh,
we didn't do the credit card trap. Let's just jump

(56:28):
to that real quick. A really close friend of mine
that's a very high level finance guy, he said, he
said this quote. He said, the credit card credit cards
are a trap. It's a game that is structured so
that you will always lose. And what that means is
is that they charge you. They charge you interests, but

(56:51):
that's controlled by the government. They can't charge but so much,
but it's high. They can go up to like twenty
four to twenty seven percent sometimes. But where they really
get you is on a late charge. And the best
story I can give you on late charges is my
wife paid a department store credit card account we had
one time a bookkeeper made a mistake. They didn't post
her payment, and the bill came in and I knew

(57:11):
that we had paid her balance, but the bill showed
that we owed money, and they charged interest on the money.
We ended up having a three cent balance because they
didn't post it when they were supposed to, and I
didn't know that we had a three cent balance. I mean,
this is a stupid example I've ever heard of my life,

(57:31):
and it happened to me and my wife. So in
the next month bill came in, and I knew that
we were paid up, so I didn't look at the bill.
Then I looked at the next month bill and the
bill was for thirty five dollars and four cent, and
I looked at it and said, what's going on. They
charged a thirty five dollars late charge because we didn't

(57:53):
get a three cent paid off, and then it was
a penny interest that had accrued on it. So we
owed thirty four cent. But we called them up and
they saw that they didn't post our payment properly in
the right statement period, that we had made the payment
in the store the right day. My wife paid her
credit card right there at the counter at the register,
had a receipt. We paid it on time, but they

(58:15):
didn't post it the right day. They showed that we
were late. Bottom line is a three cent charge that's
on your account, that's wrong. Cost thirty five dollars. They
credited off. Everything was fine, but credit cards. And you
use credit cards and don't pay your balance. Sure, everybody
uses them. You pay your you pay your your monthly fee,

(58:38):
your minimum balance. I did work with the person that
had he's a naval military Army officer, and he had
a guy that was in heavy debt. And the guy's
wife was charging up the kazoo while he was on deployment.
And you said it earlier. A husband wife have to
work closely together. And so what happened was this guy

(59:00):
lost all of his credit because his wife was making
all these charges. I think they later got divorced. But
he taught this guy that if you only make a
minimum payment, it'll take fifteen years to pay off the balance.
If you max out your card, don't use it anymore.
So here's the credit card trap. You're innocent. You get

(59:21):
a five hundred dollars credit card, you max it out,
you start making a minimum payment, and you can't use
it anymore. But now you're making a payment, your current
income is being used to pay that credit card forever.
If all you do is make a minimum payment, because
the interest rate that they charge you your balance just
doesn't ever really go down. And the bottom line is

(59:44):
that they put you into using their card and you
got maxed out your intentions. If you use a credit
card and pay your balance off in full every month,
that's safe, that's fine. It won't cost anything to use
that credit card. But most people that's their intention, but
something happened, they have to use cash for something else.
They let that balance ride, they pay the minimum balance,

(01:00:05):
and then before you know it, they're just paying that
credit card company tremendous amounts of interest, and that's not
managing their credit properly. Let's do this, Johnny, why don't
you give me some thoughts on this. We're running out
of time on today's show. Let's pick back up on
the credit card trap a little more next week. We've
given the basics of honoring your commitment and things like that.
Would you like to sum up some of this stuff

(01:00:27):
and we're going to defer the credit card trap into
next week.

Speaker 3 (01:00:32):
Yeah. One thing is when you make a commitment to someone,
because that's using your character.

Speaker 2 (01:00:39):
When you get your character in integrity.

Speaker 3 (01:00:42):
Always go to the low end and you can pay
it off faster if you desire, but go to where
you know it will fit into your budget.

Speaker 1 (01:00:53):
Right.

Speaker 3 (01:00:54):
So, like Steve was using the example of they were
on the phone and they said, you know, if you
pay one hundred dollars a day, well even if if
you can pay one hundred dollars a day, if that
would take you to zero, say nope, all I can
pay is fifty and pay it out. You know, fifty
dollars a month, and it's going to extend it. But
then you can turn around and you can always pay
more in the future. Leave the control in your hands

(01:01:14):
because you don't know what else may happen.

Speaker 2 (01:01:17):
Number one. That's the tip. The other thing is remember that.

Speaker 3 (01:01:24):
Character is something you build over time because it's based
on trust, it's based on relationship, it's based on your commitment,
is built is based on your consistency. And again all
of those words are connected to your to making your
payment or your commitment. As far as the concerns to

(01:01:47):
your credit, that's what they're looking at. And then the
final thing I would say is anytime you do credit
and hear me, well, credit is a commitment. It's actually
an obligation of your future earnings. I'm gonna say it again.

(01:02:10):
Getting credit, whether it be a loan, credit card, house, whatever,
is an obligation to your future earnings.

Speaker 2 (01:02:21):
So keep that in mind as you move forward.

Speaker 3 (01:02:26):
How much of your future earnings do you really want
obligated on a consistent basis? And what does that do
to the life that you desire in your personal life?
What are you willing to do to commit so you

(01:02:48):
I don't ever recommend people do one hundred percent commitment
because that's just not smart. But even if you did
it ninety percent, that means you only have ten percent
available and we're doing after Texas and all that wonderfulness.
So remember that when you sign the bottom line, when
you swipe your credit card, when you sign on whatever

(01:03:11):
to pay somebody futuristically, it is an obligation to your
future earnings.

Speaker 2 (01:03:19):
That's it for me, Steve, I think, go ahead.

Speaker 1 (01:03:22):
I love what you just added to today's conversation, because if
you overcommit, if you over obligate, you get into a
box in your life where you feel like you're trapped,
not just the credit card trap, but just the proverbial
You're in a box that you don't know how to
get out of. The pressure is enormous. You've got to

(01:03:46):
keep working, you got to make more money than you're making.
You're apt to do things that you don't want it
to do, and there's a lot of bad decisions that
are made when you're under that kind of pressure. So
manage your credit properly effectively, don't overextend yourself. And we're
gonna just pick up for a few minutes on the
beginning of next week's show. But next week we're going

(01:04:08):
to get heavily into debt, because debt and credit go
hand in hand. I remember, originally we thought we might
try to talk about both at the same time on
the same show, but we knew that we weren't going
to be able to cram it into one show. So
sorry that we didn't go further in some of the things.
The credit card trap that I'm talking about, we alluded
to it, but we didn't cover it completely. Johnny, listening

(01:04:30):
to you today, being with you today was a pleasure
of joy. You had some great, great insights and information.
I hope that everyone listening is going to get some
value out of what we're doing. Johnny, thank you so much,
and I look forward to being with you again next
week and God bless you, God bless everybody. Have a
great week. Thank you, thanks for listening to right thinking

(01:04:52):
with Steve Copeland. I'll look forward to being with you
again next week and remember don't quit. Plan ahead. It
will get better. God bless you, and have a great week.