Aloha Inspired Money Maker. If this is your first time here, welcome. If you're a returning member of our audience and community, welcome back. Today, we're diving into a topic that quietly shapes our lives in more ways than we realize. Credit scores. These three digit numbers can open doors or they can slam them shut, impacting everything from your ability to rent an apartment to the interest rate on your dream home. But how much do we really
know about how they work, how to improve them? Or how to influence life's or how do they influence life's biggest milestones? What if you could boost your credit score fast with just a few smart strategies? How do credit scores sneak into everything from job applications to your insurance rates? And how can you protect yourself from scams that could wreck your financial reputation overnight? We've assembled a stellar panel of experts to answer these
questions and more. They're going to share practical tips, personal stories, and innovative strategies to help you build, maintain and protect your credit score while navigating life's financial milestones. Whether you're just starting out or rebuilding after a financial setback, or aiming for that perfect credit score of 850, this episode is packed with actionable insights to help you make smarter money decisions.
Before we begin, I've been spending a lot of time on LinkedIn where this episode is being live streamed, and I've recently hit another milestone, surpassing 13,000 followers. If you're on LinkedIn, let's connect. Find me at LinkedIn.com/in/advisorandy or if it's easier, just search for Advisor Andy. We'll see how LinkedIn's search functions work and I post regularly on a variety of topics like tips for better managing your 401k and even my thoughts on congestion
pricing in New York City. If you follow me, you'll get my daily market wrap up video summarizing the day's market action and notable financial news. And I promise you'll get so much, much more. So let's bring in our guests and get started. I'm going to start with Chi Chi Wu. She's senior attorney at the National Consumer Law center, specializing in consumer credit issues such as fair credit reporting, credit cards and medical debt.
She's a leading voice in advocacy and research, with extensive contributions to legal manuals and reports addressing systemic biases and transparency. Transparency in credit intendant screening practices. Welcome. Thank you, Andy. Glad to be here. I think. It doesn't look like you're muted, but I couldn't hear you for some reason. I'll try again. Hi. Oh, thank You. You guys glad to be here? Yeah. Yeah, we can hear. This will be an adventure. Maybe I've lost
audio. Next we have Ted Rossman. He's a senior industry analyst at Bankrate, specializing in credit cards, credit scores, and personal finance strategies. Frequently featured in major media outlets like the Wall Street Journal and cnbc, Ted is passionate about helping consumers maximize rewards, eliminate debt, and achieve financial success. Ted, welcome. Hi. Thanks for having
me. This is so good. I'm going to be reading everybody's lips until we go into the first segment and I can see if I can get my hearing back. We have Dr. Preston D. Cherry back on the show. He's founder and CEO of Concurrent Wealth Management. He's also
author of wealth in the Key of Life. With over 18 years of experience in financial services and academia, he helps individuals align their wealth with their well being, serving as the director of financial Planning program at UW Green Bay and a nationally recognized speaker and advisor. Kudos to Preston, who is here A little bit under the weather. Thank you so much. I'm doing my best Doc Rivers impression.
We hope that you're feeling better and we hope that you're drinking a lot of fluid so that you don't lose your voice in the next 45 to 60 minutes. All right, Lemon honey, I hope. And rounding out our panel today, we have Rocky Lalvani back on the show. He's founder of Profit Comes first, also host of the Richer Soul podcast. He helps small business owners achieve financial
success by managing money wisely. With a background in pharmaceutical sales and a personal journey from humble beginnings, Rocky uses his experiences to guide others towards financial freedom and abundance. Rocky, so good to see you again. Good to be back, Andy. Thank you so much for having me again. Well, I'm excited to have all of you. It's really cool to have a group of people who love talking money and credit. Let's go straight into segment
one. A credit score is a three digit number, typically between 300 and 850, representing an individual's creditworthiness. It's based on data from credit reports and helps lenders evaluate the risk of lending money. Key components of a credit score include payment history, 35%, which reflects timely payments and has the Greatest influence. Amounts 30%, indicating credit utilization. Length of credit history, 15%, which benefits from a longer borrowing record.
Credit mix, 10%, highlighting diversity in credit types and new credit where frequent new accounts can lower scores. Credit scores are calculated by bureaus like FICO and VantageScore. With FICO used by most lenders, higher scores improve access to loans, lower interest rates, rental approvals, and even insurance premiums. Maintaining a good credit score is essential for financial stability
and achieving favorable terms on credit. Staying proactive about managing these factors enhances your financial health and opens doors to better financial opportunities. Foreign. Ted, you mentioned before we went live that you wanted to be a sports announcer, but you love talking about credit scores and money because these are topics that touch all of us. Can you talk about how important our credit scores really are? Your credit score is one of the most
important numbers in your financial life. It goes a long way toward determining whether or not you're approved for loans and lines of credit credit, even many non credit obligations like renting an apartment, getting a cell phone plan, signing up for utility service. In all those cases, if you have a low credit score, you could be denied or you could have to put up a higher deposit.
Your credit score is super important and it really is important for people to know this information, figure out how it's calculated, figure out how to improve it. It really touches a lot of aspects of our lives and I would argue it's become even more important the past few years as interest rates have go. We've seen record high credit card rates in recent years. You really want to put your best foot forward from a credit standpoint. Yeah, I mean, we, we're all impacted by inflation and the rise
of, of our expenses monthly. But it sounds like the credit score is like really hidden, can, can have a very big impact on the prices that we pay and the money that we spend. It's a report card, you know, it's basically your financial report card. It's meant to assess how likely you are to pay a lender back. And you know, even a little bit of a difference can make a big difference on a product
like a mortgage. You know, let's say 20 points different on your credit score, maybe that's worth, you know, a quarter point or a half a point. On a mortgage rate, well over 30 years that might be tens of thousands of dollars. So that's just one illustration. But yeah, your credit score is a really important part of your financial life. Chi Chi, I've heard you talk about major credit reporting agencies are essentially a functional monopoly. Can you elaborate on how this affects all of us?
Yeah, absolutely. So this credit card for almost all consumers in the United States, it's not held by a public school or private school or the government. It's held by three corporations, Equifax, Experian and TransUnion. And it's the data in those credit Reports that gets fed into the computer models by FICO or VantageScore that spits out the three digit credit score. Now, these three companies, they have all of our, all this financial data on us, but we are not the customers. We
are. Our data is the commodity. Their highest duty, these three companies, isn't to us. It's not even to the lenders or, you know, you know, the public good. It's to shareholders. They're in it to make money. And what this means is that they trade in our data. We are not the customers. The lenders and the, the debt collectors that use the information are the customers. And so it's sometimes things go wrong. For example, there's a lot of
inaccuracy in credit reports. The Federal Trade Commission did a big study about 10 years ago and found that, you know, one out of five consumers has a verified error in their credit report and 1 out of 20 has an error so significant that it could cause them to be denied credit or to have to pay more for it. And, you know, one in 20 consumers is a lot when you're thinking about something as important as your financial report card. Like we would not accept an error rate
of 1 in 20 for other things. Like what if 1 in 20 planes fell out of the sky or 1 in 20 cars exploded spontaneously? That would not be good. So this error rate in credit reports is a huge problem and it's hard to get those errors fixed. In fact, just yesterday, the Consumer Financial Protection Bureau actually sued one of these companies, Experian, for not having a proper system so that consumers can dispute and have errors fixed on their credit report.
How often do you check your credit report for errors? So consumers should always check their credit reports for errors? I do at least once a year. And it used to be that you get one free report from each of the big three credit bureaus once a year. That's what you're entitled to under the law. But one of the good things they've actually done is they're making free reports available on a weekly basis. So, you know, if once a year doesn't seem adequate to you, you
can go to town and order once a week. Now, you're not going to see a lot of changes from week to week, but you should definitely order your report if you're about to engage in a big transaction. So you're going to apply for mortgage, apply for car loan, try to get an apartment or a job, definitely check it before then to make sure that there no, no errors. Preston, how does credit enter the discussion that you have with
clients. Are you trying to balance, like credit as part of a discussion that goes with like financial literacy and emotional well being when talking about money? Oh, well, I'm trying to balance. Here's my Doc Rivers going on right now, like kg come down to the post. But, but you know, with clients, I'm trying to combat misinformation. For example, some people don't even believe you need a credit score anymore, right? It's like, well, credit scores are irrelevant when you get to a certain level
of income, high income or wealth. And that I say that's not true because as it was said already, you know, credit scores are not just used for lending. Right. It's used for services and life insurance, a whole host of other services that we need in our life that is, you know, very essential. I mean, so. And you have to have
a lot of wealth. I mean, 10, 15, $20 million, something to effect to where you're having to borrow against your assets like life insurance or, or a stock portfolio in order to finance yourself. Other than that. Right. And that still may not be optimal. Other than that, you need a credit score to signal that you're somebody good, to access capital to. My goodness. Right. So sometimes there are false narratives out there that must be, you know,
offset with good information. I have noticed when talking to an insurance agent about my auto insurance and I'm trying to like, call and get my premiums down, credit score comes up. You know, the agent's always saying, well, let me check your credit score. And oh, okay, your credit score is good. Let me see what I can do.
It's always this game. So, Rocky, I want to ask you because as an immigrant who came to the United States with pretty humble beginnings, and you've built significant wealth in a generation, how do you view credit? I think it's changed over the years. You know, in the beginning, when you're first starting out, you need credit, and so you want
to always have that good credit score. Again, as you talked about, as you build wealth, it becomes less important, but kind of like your conversation with the insurance agent, it's a reflection of the way you behave. And so for me, I don't worry about my credit score, but my behaviors automatically drive good credit scores because I believe I behave in a good financial way to be able to do
that. And then also passing it down to your kids, you know, is they're starting off life or they want to go rent apartments, get loans, buy cars, is helping them to establish good credit. And there's a lot of ways to do that as well. So I think there's an importance to it. But as you build wealth, it becomes less important, but still important. Anyone else want to add to this topic of trying to understand
credit? Well, I would just say that, you know, we've talked about how credit scores are used for non credit things like insurance and getting an apartment. We don't necessarily agree that's a good thing. I mean this credit scores were designed for one thing. Okay? Fico, the Consumer Financial Protection Bureau actually said this. They're designed to predict the risk that you'll be 90 days late on a credit obligation within two years.
They're not designed to tell whether you're a responsible person because sometimes people have bad credit, not because they're irresponsible or a hot mess, but because bad things happen to them. They got sick, they lost their job, they got into an accident and you know, then their credit may get messed up, but it's not a reflection of who they are. It's a reflection of what happened to them. And that really shouldn't be used for things like whether you get a roof
over your head. You know, it's really not a reflection of whether you're a moral good person as much as circumstances. And so we don't agree that they should be used for tenant screening or cell phones or insurance. There are a few states that prohibit the use of credit information for insurance and we think those are the, that's the better approach. It's a good point, but then we still have to work if that, if the world is working the way it is. We do have to understand how the game is played,
right? Certainly understanding how the game is played is important. And you know, what you can do on an individual level to help your own score is important. But also remember that you as a voter and a citizen of this country also get a small say in what the rules are. So for example, yesterday the Consumer Financial Protection Bureau announced that they're going to ban medical debts from showing up on credit reports. That's huge. Five million people are going to see better credit
scores because of this. The rules got changed for the better because your credit shouldn't be ruined because you got sick. Unfortunately, we don't know if that rule is going to stick because of what's happening in our country. And so, you know, it's, you know, yes, you should do everything possible to get your own house in order and your credit good. But also understand that it's not a moral judgment, okay? If someone has bad credit, it's
not because they're a bad person. So give yourself some grace. We're going to go to segment two. We're going to talk about how to improve our credit scores. Building and improving your credit score requires practical strategies and consistent habits. Secured credit cards, for instance, are a useful tool, especially for those new to credit or rebuilding it. By making a deposit that serves as your credit limit,
you can build credit with responsible usage. Credit builder loans work similarly, allowing you to build credit as you make payments with the loan funds released at the end. Becoming an authorized user on another's credit card can also boost your score. If the primary account holder has good payment history and low credit utilization. Managing credit utilization is key. Keeping usage below 30% of your credit limit is ideal, and paying balances in full each month
helps. Setting up automatic payments can ensure you don't miss due dates and build a good payment history. Reviewing credit reports regularly and limiting new applications protect your score. Combining these tactics can strengthen your credit over time, opening doors to favorable financial options. Ted what's the fastest way someone can boost their credit score? The fastest way is probably to get errors
taken off. You know, like Chi Chi said earlier, about 1 in 5Americans have errors on their credit reports, and some of these are really significant. Maybe it's identity theft, a fake account that doesn't belong to you. Maybe it's a late payment that you actually made on time. Getting those disputed and removed can be really, really impactful. Now, as far as other things, in general, credit is more of a marathon than a
sprint. We're talking about over the long haul, paying bills on time, keeping debts low, showing that you can successfully use various types of credit over the long term. Late payments can stick with you for up to seven years. Now the impact is going to be most pronounced in the first two, I would say. If you have a misstep in your credit past, try to fill your report with good information. You can't always get that wiped off, but maybe at the very least, double down on
making sure your current payments are going to be on time. Maybe get on someone else's credit card as an authorized user, like a parent or a spouse or a sibling. Sign up for something like Experian Boost, which can give you credit for things that haven't historically counted, like streaming services, cell phone plans, certain rent and utility payments. There are some things that you can do, you know, bring your credit utilization
down. If you have a credit card and you know, whatever credit you're using divided by credit available to you, you want that ratio to be as low as possible and it's reported on the statement date. So if you use a card a lot and you have a $5,000 balance and the credit card limit is only $7,000, you're using a lot of that available credit. Could you pay that down in the middle of the month, Knock that number down before the statement even comes out? Could you ask for a higher
credit limit? It does take credit to build credit. I would say so sometimes it's worth asking for a higher credit limit even though you have no plans to use. It if you're going to use it responsibly. You know, if you're somebody who has credit card debt, the average interest rate is 20%. We don't want to add to that. So, you know, some of these tips are more for people that are confident they can use the card without paying interest. Maybe
they're more focused on rewards and other things. I want to stress too that you don't have to be perfect with credit scores. Once you hit about 740 on that scale, that goes from 300 to 850. Once you hit about 740, you're probably going to get the best terms. So you don't necessarily want to be perfect, but you do want to strive to have the best score that you can, you know, within reason. One more thing to point out here. About 10%
of Americans don't have a credit score at all. They're what's known as credit invisible. Maybe they haven't used credit in the past or at least in a while. Another 40% or so have what's considered subprime credit, basically a lower credit score. So really when we're talking about credit building or credit rebuilding, we're talking to about half of all Americans. That's a significant portion of the population. I like
the idea that it's a marathon, not a sprint. Preston, along those lines, what role do good financial habits like budgeting and timely payments play in really creating a sustainable, I guess, practice for building a good credit score? Yeah, absolutely. I always share that budgets, they don't show what you can't do. They show what you can do because they're actually free. Where if you look at your money and you don't know where it's going or you it's going too much out of the
window. I'm staying in my parents house right now that I grew up in for almost 30 years and there's a little plaque on the wall that says there's too much at the end of the money, you know, and and what, what that means is, is like, you know, I don't feel well about my money sometimes, right? And if we have a budget, it says, wow, I know what my money can do for me. And what does that have to do about credit? Well, if you know what you're spending on your, on your everyday living expenses,
gas, you know, entertainment, maybe utilities, all this, right. And you know what you can spend, well, that can help your credit too, because you can use your credit card in order for, to pay for those expenses and then pay those off intra month, you know, so you're not getting charged any interest. But you're also showing that you are demonstrating that you are a good credit manager. You're also managing your budget at the same time. So this is, I've heard the word behavior come up a couple of
times. Good behaviors, good habits, practices, whatever synonym you want to use. Those are the consistencies that are going to compound over time and result in a better score. And I also heard one more, one more thing. I also heard that, you know. Yes. Is this a quote unquote game? Is it? It's good to know the rules. The more information that we have,
the better. And if we know it earlier and we practice it earlier, then we won't have to get into the, you know, the situation where we're having to do a whole bunch of repair later on. Rocky, you work with a lot of business owners. Do we have to think differently for an individual's household versus running their business in that credit? Well, so those are two different credits, right? You have your personal credit and then depending on how the business is set up, there is
business credit. Unfortunately, business credit, especially for smaller diff companies, is very difficult. More often than not when they're getting credit, it's against an asset. So they can get a real estate loan, or they can go to the SBA for a loan, or they can get a vehicle loan. But if they want working capital, which is always needed in the
business, it's not easy. And many times they also have to sign their personal credit against their business credit, which means they're personally responsible for what happens with the business. I know during COVID the government handed out a lot of
loans. I think they were called the Eidl loans. And if a business owner took those loans out above $150,000, they are personally on the hook for those, those particular things, which again causes more trouble if something goes wrong because then it not only is your business gone, your personal credit's gone, which now you got double whammy. Yeah, that's not good. Chi Chi, what protections exist for consumers trying to rebuild their credit?
So, credit reports, Credit scores are regulated in the United States under the Fair Credit Reporting Act. This is basically the nation's first privacy law, data fairness law. It requires the big three credit bureaus like Equifax, TransUnion, you know, plus tenant screeners like RealPage or Yardi. It requires them to have reasonable procedures for maximum possible accuracy. It requires them to investigate disputes. So if you think you have an error in your credit report, you can dispute it. And
they're supposed to conduct what's called a reasonable investigation. You're allowed a free copy of your report once a year from the big three credit bureaus. And you can also get a copy, a free copy of specialty reports. So things like check systems and early warning services and, you know, tenant screeners that I mentioned earlier, you're entitled to notices when a report's used against you.
So, you know, someone pulls your credit report or your tenant report and turns you down for credit or an apartment, you're supposed to get a notice telling you that it happened and what company was used to pull your report. So these are sort of basic common sense data, like, you know, fair information practices type protections. And they are really what govern both credit reports and other types of reports. You know, there are also things to prevent
identity theft. And the single most important, important measure, like if you're concerned about identity theft, if you're worried someone's got your Social Security number, your information, the single most effective thing you can do,
and it's completely free, is to freeze your credit. To put a freeze on your credit report, you can go to all of three of the big three credit bureaus, Equifax, Experian, TransUnion, and request a freeze that locks down your report so that it can't be used for new credit until you lift or thaw that freeze. So if you want some control over your credit report, present identity theft, get a freeze. Here's a quick question
for the panel. Should one be, I guess, suspicious or skeptical if being sold or pitched? Like, how to fix your credit quickly? Like, does it not work that way? No, it doesn't. And you should. That is like a big red alarm bell. Do not do that. Because there are a lot of companies out there called credit repair companies or credit pair outfits that they'll promise you we can fix your credit, you know, and they'll sign you up for a
monthly subscription. You end up paying a lot of money. And what they do is they Try to flood the credit bureaus with disputes. But the credit bureaus like their whole system is built so that bad information doesn't come off your report permanently due to credit repair. You're just going to be out a lot of money if you, if you sign up for credit repair and it's going to end up hurting you at the end. Anyone else? Yeah, big red flag. There's so many scams out there
unfortunately. And scams are getting worse actually hacks people asking that getting messages straight on your cell phone now and, and it look, and it looks like they may even put the Experian logo on there or whatever the credit bureau is banks and so just be careful because there's so much information that's coming via email, via text message, even messenger is coming over. So just watch out for these big scams. And I would, and I would say that it takes a while to repair your credit.
Okay. It's just not going to happen overnight. This is more of a at minimum, not six to nine months. You know, it's more like say nine to 18 months to repair your credit. And that's just the start. Great advice. So buyer beware. Let's go to segment 3. Responsible credit management helps you avoid common financial pitfalls and keep your credit score healthy. To start, aim to keep credit utilization below 30% by maintaining low balances on credit
cards. Paying off your balance even each month is ideal, but if that's not possible, paying more than the minimum can reduce debt and interest charges over time. Avoid high interest loans like payday and car title loans, as they often lead to costly debt traps. On time payments are essential. Setting up autopay or using calendar reminders can ensure you never miss a due date, protecting you from late fees
and preserving your credit score. Before using any credit product, review the terms, including interest rates and fees, so there are no surprises. Also, limit new credit applications as each hard inquiry temporarily lowers your score. By keeping credit utilization low, making timely payments, understanding product terms and minimizing inquiries, you'll maintain strong credit health and access to better financial options.
Chi Chi, following up on what you were talking about in the previous segment, how can consumers ensure that they're accurately represented in their credit reports? Any specific tips for when it's necessary to dispute errors? So, as I said earlier, it's really important for consumers to check their credit report at least once a year and more often if they're about to engage in an important transaction like buying a home or a car or trying to
rent a new apartment. Pull your credit report from all three credit bureaus, look for errors. If you see an error, dispute it. We generally recommend when you dispute it, that you do so by mail. I mean, the credit bureaus do have online portals to dispute errors on your credit report, but you want to try to leave a paper trail, especially
if you have things like documents. Let's say, you know, you have, you have a credit card account and it's showing a late payment and you're like, I didn't pay that late and you have a copy. Maybe if you're old fashioned, a canceled check or, you know, probably more likely a bank statement showing a, an
automated withdrawal from your bank account. And you want to send a copy of that bank statement, put it in a letter, make a copy your statement, add it, go down to the post office, you get a certified mail with that little green card so you can prove that you submitted that dispute because these are all legal rights. And maybe it gets
fixed, maybe not. But you want to create a paper trail because worse comes to worse, you may actually end up having to file a complaint with the consumer bureau or even getting an attorney. So you want to do this in writing, maybe take that copy, that credit report you've got, and circle the error, have someone else look over your letter of dispute with the
documents. I know it's a lot more work, but if it's something important, let's say you're about to apply for a mortgage and that 30 day late could cost you a quarter of a point of interest. You want to lay a record and get that fixed. Ted, any advice? Can someone strategically use credit cards to improve their score and maximize rewards without falling into debt? You can, yeah. My favorite industry saying about credit cards is that they can be like power tools, as in really useful
or dangerous, depending on how you use them. Half of credit card holders pay in full every month, and for them, life is great. They avoid interest, they get rewards, they get buyer protections. The other half, those that are paying an average interest rate of about 20%, that's a trickier situation. But when we're talking about credit, a credit card is unique too, because it's really one of a very few financial products that you would sign up for.
And you could potentially build credit without paying any fees or interest. You know, let's face it, you're not going to sign up for a mortgage or a car loan just to build credit. In fact, you probably won't qualify for those if you don't have credit. So it, it is kind of circular, right? It's like a Chicken or the egg kind of thing. Takes experience to, to get experience. Similar to a job, a credit card is often people's starting point. Maybe it's a student card or a secured card or
a store credit card. You have to be careful with those because they charge really high interest rates. But you know, secured card involves putting down a deposit. That can be a safe way to start with a low limit. You know, maybe it's a $200 limit. These are some of the ways people build credit. You pay it off right away, you get a no annual fee credit card, you don't owe interest. I mean that can definitely be a very valuable credit building
tool. Getting on someone else's card as an authorized user too. I love that idea for you know, let's say teenagers, people in their early 20s, they're new to credit. You can piggyback off a parent's hopefully positive payment history by getting as added as an authorized user on one of their credit cards. Good advice, Preston. Do you see any like common mistakes that clients make? I would go back to say just underestimating credit and also taking, taking credit personal.
Now I would say that no, it's, no, it's not a moral, you know, label on, on yourself. I mean life happens. That, that said it can't, it is a journey just like life. So it does feel good. When, when, when credit karma comes up and says hey, you know, your credit score is improved by 20 points. Well, it's because you've been working on it, you know. So it is a journey to say okay, I was here, all right at a place and I wanna, I aspire to go to another place to achieve some sort of
milestone. Right. So thinking of it in that lens and reframing the journey in a positive thinking mindset, whether you have excellent credit and don't ruin it or you have challenging credit and want to fix it, it is applying the mindset to having a, a healthy relationship with your financial practices and knowing that credit is important, grab a hold of it and, and take it by the horns and do
something well with it. And lastly, I'll say is, is even for my high income and my high net worth clients, is it? You never know when you're going to need credit until you do. Okay. And some people may say oh well, I don't need credit. Well how about, here's another reframe. How about access to capital, you know, Right. It may be for business, although business and personal credit is different like it was already alluded to. But that still
taking care of your Business credit. I have a business. My business credit score and my business profile on Dun and Bradstreet is important. Access to capital. You never know when you may need access to capital. So I would say applying a mindset to do better with your finances and your credit and not to ruin it and also not to discount it. It's a good reframe. Rocky, your thoughts on mindset and maybe a simple daily habit.
You know, I think the biggest problem we face today is we don't feel spending money anymore. When I grew up, when I was young, we didn't. Well, I guess we had credit cards, but it wasn't the norm like today for everything. And so when you pulled a hundred dollar bill out of your wallet, you had to let go of it. You felt the pain of letting go of that money. In today's world, people just tap, tap, tap in. A $2 tap doesn't feel any different than a $5,000
tap. And so I think you're, you're losing the emotional control of your actual spending. And what happens at the end of the month is you get a credit card bill and it's thousands of dollars. And. And sometimes when you look at it, there's no big spending. It's $20 here, $50 there, and by the end of the month, you're out thousands and thousands of dollars. So I think emotionally you've got to watch control of what's going on. Can I jump in real quick? Rocky? That was great. I'm a
big fan of check registers, all right? Those are old school because you got to go in there and you got to write it down, all right? Line item by line item, all right? So it's right there live. They don't even use those anymore. But for those folks that need to coach up, even those with money, I'm like, here's a check register, all right? Because it gives people a feel, just like Rocky said, pulling that $100 out when you have to write a debit and a credit minus. Oh, yeah. You
feel that when you have to write it. Can I add one more thing to what Ted's had really excellent advice as well. He mentioned store cards. And this is another sort of pet peeve of mine. Store cards, you have to be especially careful of something called deferred interest. So you might go into a store, especially a big box store, and they'll offer you a no interest credit card.
And it sounds too good to be true, especially around the holidays. So you might have seen this last month, you know, open up a xyz store card. We have a no interest promotion, but it's not no interest. It is too good to be true. What it is, is it's one year of no
interest, but interest is actually occurring in the background. And if you don't pay off the entire amount by the end of the promotional period, by the end of that one year, that whole amount of interest that's been accruing in the background is going to be slacked onto that account and you're going to owe, you know, hundreds of dollars in interest. It's going to be really expensive and a nasty shock. So I caution folks
always, especially with store cards, watch out for no interest promotions. And we actually, unfortunately also see those in doctors and dentists offices too, which is another place to be cautious about them. Deferred interest. I got you later. Hey, if I could jump in here too, just. Chi Chi, this is a great point. Sometimes it's cool to use other people's money and not all debt is bad debt. That's another thing that somebody asked me was about, you know, as far as reframing on credit. Not
all debt is bad debt. Not all credit is bad credit. All right, so for example, my wife and I bought some furniture and when we got married, I bought her big old ring. And it is. Yes, I used big old. Right. All right, but listen, it was. It was 0% for 18 months on both of those items. So what I would. I was using my money now for my business. All right, that's cash flow. And what I did was for both of those
big ticket items, I took the balance divided. Instead of about 18, I divided it by 12 and did an automatic setup to pay that card off every month. And I ended up using their money as zero percent interest and kept the cash flow for my business. So sometimes you can use it that way. You just have to set up the automation. You have to be disciplined and, and be mindful so you will not incur that deferred interest as Chi Chi was talking about. I mean, I would say it worked for you
and I'm super glad and it works for a lot of folks. But there is the risk that, you know, life happens and somehow you're not able to make those payments. And it catches a lot of people unawares. They don't know what's going on. I mean, speaking of that big engagement ring, I talked to a young lawyer and this man went through law school and he got a big old ring at one of those big box jewelers using the promotion. He didn't understand what's
going on? He got slapped with hundreds in interest. You know, it's a trap for unwary folks too, so got to be really careful. Great advice. We're going to move to segment four. Credit scores influence key financial decisions like renting, buying a car and securing a mortgage for renters. A higher credit score boosts approval chances and may lower required security deposits. Preparing includes checking credit reports for accuracy, paying bills on time, and
managing debts in car buying. Credit scores impact loan approval and interest rates. Higher scores typically qualify for lower rates, reducing overall costs. While lower scores may lead to higher interest or rejection. Reviewing your score and pre approving can secure better terms when applying for a mortgage. Credit scores affect eligibility and interest rates where higher scores mean lower lifetime costs.
Key preparation strategies include low credit utilization on time payments and avoiding new accounts near application time. A strong credit score can also give negotiating power with lenders and landlords. Planning and saving for big expenses reduces the need for high interest credit, supporting financial stability and access to better terms. Watching that segment, I feel like credit is something that really comes to the forefront when there is a major milestone happening, perhaps buying a
house. But it seems like something that we need to be thinking about or cognizant and our actions need to be helping to build good credit all the time. Ted, any thoughts in that regard? Your credit score does require some ongoing attention. I do like how annualcreditreport.com now gives weekly free credit reports. Now, you don't necessarily need to check every week, but I would say maybe at least a few times a year or certainly before you're in the market
for credit. We've also seen improvements in recent years with a lot of banks and credit card issuers offering free credit reports and scores to their customers. I feel like there has been more awareness of this issue in recent years. It's evolving too. You know, some stuff doesn't count anymore. Like most medical debt has come off credit reports. It used to be that tax liens and even certain library fines if they were sufficient enough to go to collections.
You know, that stuff used to ding people. Those public records have come off. But now we have this new frontier. Buy now, pay later is a really interesting example. That is a very increasingly popular new lending method that I'm talking about a firm and afterpay and companies like that. Most of those plans don't report to the
credit bureaus. And I feel like this is kind of a blind spot that needs to be solved because, you know, part of why some customers are drawn to it is you don't necessarily need great credit to be approved, but lenders don't know. Do people have a lot of these plans? Are they falling behind? Things like that, I feel like are coming into the light. But I wish there was more credit reporting
on things like that. If you use it responsibly, it should help you. If you fall behind, it's reasonable to think that it could hurt your credit score. So I think sort of the evolution of credit is interesting, and we're still catching up on some of these things. I mean, even a lot of rent payments are not reported. Some are, but many are not. Streaming services, utilities. There have been some efforts to modernize the credit scoring system, but I feel like there's more
that could be done. Talking about Buy now, pay Later, I mean, it seems like the benefit is that it's easy to get. People can get it quickly. Maybe they're not doing a credit check. But if you don't pay on time, that catches up to you too. Does that ding your credit if you don't pay and. Or it seems like there's deferred interest. Right. You could get hit with a high interest later. Most Buy now, pay later plans right now are outside of the credit reporting
system. Now, that doesn't necessarily mean you don't need to pay. I mean, we should always pay our, our loans back. And there are some other avenues they could pursue. They could cut you off from future loans. They could potentially sue you or try other, you know, ways to track you down. But at least as far as credit score damage, you know, that's another important thing. Maybe just to level set on, like if you're a day late on a credit card, you can be charged a late fee. The average is
$32. It doesn't usually affect your credit until you're 30 days late. We should still try to pay on time, of course, but, you know, there's all sorts of interesting intricacies with all this stuff. Buy Now, Pay later is one that concerns me because it's really increasingly popular, especially among young adults. Many are new to credit. They're using it as an alternative to a traditional credit
card. They're not always using it responsibly. I feel like that's one that, if unaddressed, could be a little bit of a ticking time bomb. As far as it feels like $50 here and $50 there. But some people are overdoing it. And we don't always know what we don't know because it's outside of the traditional credit reporting system. Yeah.
And Sometimes if you have too many, it's hard to catch up. Chi Chi. So I would just like to say with respect to buy down pay later, we do, we would be concerned if a lot of it was added to the credit bureaus and traditional credit reports. Because the way that these loans are structured, you know, the, the traditional or the, the most common pay in for type buy, not pay laters, you repay every two weeks
for payments. And the way that ends up looking on a credit report if it were to be reported like that is you'd have a lot of very short term loans. I don't even know how you report it because the whole credit reporting system is geared toward monthly payments. But the problem is a lot of small short term loans doesn't look great for a credit score.
If you go all the way back to the beginning of the segment and you, you heard what goes into credit scores, it's things like, you know, the age of accounts and how long you've had them and then this thing called utilization that the ratio of credit used to, to credit available. And those factors all get really janky with bnpl. You know what I say is it's trying to fit a round peg in a square hole. So you know, I'd be concerned if a lot of it shows up in the credit
bureaus. I think it would end up hurting consumers more than it would help. Yeah. And I would also say that this current generation needs to be introduced to the reverse of being pl, which is layaway right away. I know y'all do, right? So but also this is why it's very important to align what you want to do with your life currently and later with your money. And that disciplines and puts boundaries within your money and it becomes more
freeing later. And why is that important is because if you are spending to feel some sort of emotional gap, if you're buying to impress the Joneses, if you are just doing, just doing self destructive behavior, not I'm not talking about the life, the, the stuff that happens in life to everyone, not talking about that. But if you figure out what you want to do, like hey, my next milestone is getting an apartment, getting a bigger house and for those people to high income and, and high
asset that second big old house. Right. You still need, you know, that's a million dollars. Right. So you're still gonna probably need some loan to do that. Right. If you're aligning your life with what you want to do with your money, then that goes directly into how you manage credit. All right. So if you have that that alignment very crucial because it misalignment costs money. I think Ted, you said that a couple of basis points
matters and, and, and how much you get charged on loan interest for it. That's the retirement. Those are retirement funds that are robbed from your, your retirement account, you know, and you're paying extra interest on the home. So very crucial and very critical to align what you want to do in life now and later. And that will then inform how you manage your
cash and your credit. It's an excellent point. That is your retirement savings, there's an opportunity cost and that money sitting in your, you know, retirement savings invested in something like the S&P 500 over time. That can equate to a lot of money. Rocky, any thoughts? It can, I mean compounding is pretty massive and compounding. People don't realize compounding works both ways, right? Compounding works to build wealth and compounding works with debt to essentially
tie a noose around you and, and crush you. So you have to be very careful on the way down, just as you are disciplined on the way up. No, it's good to keep in mind that compound interest can work for you or it can work against you. Let's bring it home and go to the final segment. Protecting your credit involves vigilance against scams and fraud. Phishing scams often impersonate banks to trick you into giving personal information while skimming devices on ATMs can steal
car data. To avoid avoid these, inspect card readers and consider contactless payment options. Peer to peer payment apps like Venmo or Zelle are also susceptible to scams. So always verify transactions directly through the app. Regularly monitoring credit reports from experian, Equifax and TransUnion helps catch unauthorized activity early, securing online accounts with strong passwords and multi factor
authentication and adds extra security. Predatory loans, often targeting those with low credit, can come with high interest rates and hidden fees. Be wary of guaranteed approval offers and review terms carefully. If you suspect identity theft, report it to the ftc, freeze your credit and dispute fraudulent charges promptly to protect your financial health. Chi Chi, you talked about the benefits of freezing our
credit. Can you give us some like a little bit lay of the land talking about the credit agencies and kind of antiquated systems and the risks that are out there. So as I said earlier, the single best protection you can take to prevent identity theft that consists of opening up new accounts in your names. We call new accounts identity theft is to freeze your credit report. You go to the websites of each of the big three credit bureaus, Equifax, Experian, TransUnion, and Sign
up for a freeze. Make sure you sign up for a freeze and not a lock, because the lock is not the legally required product. That's a voluntary product. So under the Fair Credit Reporting act, you are entitled to freeze your credit report for free with respect to new credit. And you also have the right to, of course, remove that
freeze or to temporarily thaw it. And it's a much better protection than other types of identity theft prevention, such as alerts or credit monitoring or identity theft protection, especially the products that have a subscription fee. There is no reason to be paying for credit monitoring or ID theft protection and spending your money on a monthly basis. You know, when you can freeze your credit report for free, and it's a much stronger
protection. You know, I'd also want to say that the reason the freezes were as a result of the 2017 Equifax data breach. I think a lot of folks remember that when almost everyone in the country had their data stolen from Equifax. And so that's what we, the Americans got in return for that. Terrible. I mean, we were entitled to a lot more, I think. But one of the reasons that Equifax got hacked was because, you know, you think of Equifax, Experian,
TransUnion as like, data companies and tech companies. And they must have the most shiny new tech. They actually, they've been around for 50 years, and some of their systems are that old. And so, you know, that's another reason we encourage you to check your credit report for free. Because, you know, that's sometimes how mistakes get made. They don't, you know, they don't have great systems. And sometimes those not great systems
lead to mistakes. Give you a very concrete example. Do you know that information from a creditor or debt collector is placed in a file Based upon only 7 out of 9 digits of your Social Security number? Like, if you think about it, a lot of people have similar names and addresses and such. And so the only unique identifier for most Americans is your Social Security number. And so you would think to be able to match data, you would use all nine digits.
But no, the credit bureaus use seven out of nine digits. And so what happens is sometimes people with similar Social Security numbers and names end up with their information mixed up. It's called a mixed file. And it's horrifying if one person has bad credit and the other person has good credit. And so that, you know, that is another reason their, their Bad systems end up hurting consumers. Preston, see any crazy credit scams or stories lately? Well, I was going to make a.
A joke that when. When should you check your credit report? You know, after you've gotten your free one? And I just said, you know, just wait for the next data breach it is, whether it's the target. It seems like everybody's got a data breach nowadays, right? Who hasn't gotten a email here lately that says, oh, sorry, Mr. Mrs. Such and Such, your data has been
breached? You know, we're getting a lot of. They're so common. So, all jokes aside, I. I share with a lot of people that no information is private now, and we just need to get beyond that. Just like when you're walking around town, you know, people think so, oh, I need some privacy. No, there's cameras everywhere. All right, so what does that mean? That means yes, look into your. Your. Your credit, you know, often. So we. We know
the quote, the game and what's going on and all this. That's. That is known information. So it's also our responsibilities to be checking up on our file and correcting some information out there and protecting our identities. Thank you, Ted. How can we stay informed about new credit scams and protecting our information when using online and mobile platforms? Yeah,
it's tricky. Sometimes the fraudsters are one step ahead. Unfortunately, I definitely agree with Chi Chi's recommendation about freezing your credit. I feel like that's one of the best things we can do. It's really one of the only tools at our disposal to avoid identity theft, at least in the sense of new account creation that doesn't affect your existing payment cards. Those can still be
compromised. And that's where we just need to be diligent about looking at our bank and credit card statements, because you do have some time to dispute that within a certain number of days after you get the statement. But sometimes that goes pretty quickly. We're talking a couple of months in some cases, especially for debit cards. So you definitely want to just stay on top of these
things, and there's only so much we can do. I don't mean to sound cynical, but the truth is there is information out there on all of us. There are bad actors out there. The one that I get more concerned about is somebody spinning up a fake account in your name. It's pretty easy to get payment card fraud corrected. Not that we want it to happen, but, you know, especially for a credit card. It's a line of credit. It's
really the bank's money, not Yours up until you pay them back. So it's a little bit of a hassle to get a new card and have to reset some of your auto payments. But it's that new account creation that's harder to unwind when it comes to somebody opening up a fake loan or credit card in your name. So that's where the credit freeze is really beneficial.
Just make sure to lift it before you apply for credit. I know it sounds basic, but I have a bit of a embarrassing story about one time forgetting to lift my own credit freeze and I got turned down for this credit card and then it was just, it was a silly mistake. So just remember to lift that freeze when applicable. Well, I think that's the only kind of headache is that you do have to lift it periodically. And I've found, I don't think it's me. I think that Equifax, Experian,
TransUnion, I think that they changed their websites. So like if I'm buying a car or something and I need to lift my, my credit freeze, suddenly I'm like, I, I don't know which website to log into. I forget how to do it. And then I have all my logins recorded. But sometimes I have to jump through additional hoops to get to the right place. For, for the panelists, have you like, have you done a credit freeze for your children? My, my kids are adults, so that's on them.
We do have credit freezes in and I think one of the advantages of a credit freeze is if you get excited about buying something, you now have to jump through extra hoops and so it makes it a little harder. I, I did freeze my son's credit years ago and it's actually an interesting question because you can freeze your kids credit under the Fair Credit Reporting act because unfortunately kids are great targets for ID thieves because they have clean records. But it's actually a good question.
I should check whether it's carried over to him as an adult. It's more complicated when they're under 18. Like I know you need to mail in certain documentation like including a birth certificate. It's easier to do it for yourself as an adult. You can do it in just a few minutes online for kids it is more difficult. But I agree it is important because sometimes you hear these horror stories about an identity gets stolen and maybe the fraudster blends it with an
adult. That's usually how it works. It's some kind of synthetic ID theft where they take some of the kids information and blend it with someone else's. And they make it look like an adult that gets new credit. But horror stories about people not figuring this out for decades, and it's just harder to unwind. So it's an ounce of prevention is worth a pound of cure, right? Absolutely. Any final thought from our panel?
The one thing we do, Andy, we have virtual account numbers with our credit cards so we can set them up for online purchases. So if we're going to a website that we're not so sure about, I'll set up a virtual card, we'll use it just for that transaction, and we'll turn it off. And we also have alerts that anytime our credit card is charged and the card is not present, we get texted to say, hey, this happened and you weren't there. It's a great tip.
I mean, those are all great tips. And you definitely don't want fraud on your credit cards. But remember, we do have really strong protections for credit cards in terms of fraud, unauthorized use, billing errors. You know, Ted mentioned them earlier. There's, you know, some that you have to invoke in writing within 60 days of the statement, but they're pretty good protections for the most part. But, yeah, you got to check your statement,
spot any errors, and then dispute them. Yeah. And just to add to that, I think that the credit card companies carry more of the responsibility for the liability. So if there is fraud on your account, the credit cards are doing a great job of putting in security measures. You have to be very careful with a debit card card. Some of that liability falls more on you as the
cardholder. So be vigilant, monitoring your debit cards and making sure that there aren't any suspicious charges there because you need to report that to the bank. So with debit cards, they are protected on a different law, and the protections are similar on paper. But realistically, it's tougher with debit cards because, yeah, now you're talking your money instead of the bank's money. Correct. Well, thank you to our panelists today. Thank you for everyone joining us for this
discussion on credit scores and credit. I think it was a really incredible discussion. My favorite inspired money moment has to be that through this discussion, clearly, credit score isn't just about access to loans. It's about empowering yourself to take charge of your financial future. That insight really sticks with me, and it shifts the narrative. Your credit score isn't just a number. It's a tool to open doors and create opportunities. So here's your call to action for
the week. If you didn't get it from, I think repetition. During the panel discussion, check your credit report. Go to annualcreditreport.com, pull your credit report from all three bureaus, Experian, Equifax, and TransUnion, and look for any errors or inconsistencies that might be dragging your score down. It's free, it's quick, and it's a simple way to improve your financial health. Remember, small, consistent actions can lead
to big financial wins. Once again, thank you to our panelists for joining today and sharing their insights. Make sure to follow more and follow them you can find Chi Chi Wu, who is senior attorney at the National Consumer Law Center. At nclc.org you can find Ted Rossman, senior industry analyst at bankratebankrate.com. Dr. Preston D. Cherry. He's founder and CEO of Concurrent Wealth Management. Make sure to check out
his newly released book, "Wealth in the Key of Life." You can find him at drprestoncherry.com or concurrentfp.com and Rocky Lalvani, founder of Profit Comes First and host of Richer Soul podcast, both those websites. You can find him at profitcomesfirst.com or richersoul.com. Thank you again for joining us. Inspired money maker. Really appreciate the panelists and the discussion. Be sure to find us or please come back next week. I'm not sure what the
episode topic is going to be. I'm still trying to book the guests. It's either going to be the power of philanthropy making a difference through charitable giving, or we're going to be talking about investing for Retirement growth. And that will be January 15th at 1pm Eastern. Until next time, do something that scares you because that's where the magic happens. Thanks everyone.