There were several nuggets from the show that I thought were very important.
Families need to budget monthly not yearly and divide by 12. Each month your needs change. For example, some months children are out of school and usually requires more food to be brought into the home.
Put your budget on paper. By writing down your budget, adjustments can be made if necessary.
Look at your cash flow. Many people do not know how much they actually make and/or bring home monthly.
Have a goal. Studies show that when we have set goals and we write down our goals we are more likely to achieve them.
I also promised the link regarding Parents’ 5 other card choices for college-age children. Click here to read the article in full posted on creditcards.com.
For more information contact The Finance Coach at 317-858-7270 or call Integrated Credit Specialists LLC at 317-527-1440.
I know you are wondering how in the heck can paying off an account lower my credit score. Yes, I know it sounds backwards that by trying to do the right thing you get penalized. Here is he scoop. I have long taught that 35% of your credit score is past delinquencies. Obviously, paying your accounts in full and on time has the greatest positive impact on your score. So why would paying a collection potentially lower your score?
Here’s why, the last 24 months of activity has the greatest impact on your score. The newer the item the more impact it has. The credit scoring model uses the date of last activity to determine when the 24 month countdown starts. (Note: accounts older than 24 months still have an impact on your credit score). If you have an older collection that has not had any activity on it and you make a payment, you have restarted the clock because you have moved the date of last activity.
Many times collection agencies will try to contact you in order to have you make a payment so that they can keep the account on your credit bureau longer. Per the Fair Credit Reporting Act, collections can stay on your report up to 7 years plus 180 days from the date of last activity. Do not fall for it!
I am not suggesting that you not pay your debts. I am letting you know that there is a strategic way to handle past collections. Here are 3 simple steps:
Begin with accounts reporting in the last 12 months.
Before you pay anything, write to the credit bureaus and request validation of the debt. Validation is not verification. Federal law specifies what is considered validation. See Fair Debt Collection Practices Act for more information.
If debt comes back verified, contact the collection company and negotiate for a lower payment. We suggest that you ask for a pay for delete. A pay for delete is a request that the collection company deletes the entry from your credit report when payment is received. Pay for deletes are becoming increasingly more difficult to get. But, a paid collection is better than an unpaid one.
If you are applying or going to apply for a home, we suggest you wait until you are instructed by your lender to pay off ANY collections. If your lender tells you pay off a particular account, then they have prepared for the impact it may have on your credit score.
There is nothing anyone can do for you that you can not do for yourself when it comes to your credit. However, if you want guidance and education about credit please contact us at info@intcredit.net.
