Episode 325: Mastering Credit Health: Strategies for Financial Prosperity
January 19, 2024
Mastering Credit Health: Strategies for Financial Prosperity with Kelli Green
Unlock the secrets to a thriving financial future with SVP Marketing Kelli Green, who joins us with her 16 years of finance acumen to navigate the complexities of credit health. Get ready to understand how your credit score shapes your economic opportunities and learn the ins and outs of installment debts versus revolving credit. We’ll guide you through the importance of payment history and the subtle yet significant ways new credit lines can influence your score. If you’ve ever been puzzled by the financial decisions that pave the path to prosperity, this conversation is the key to clarifying those mysteries.
Embark on a journey with us that transcends the basics of credit card usage, delving into effective debt management strategies and the power of paying above the minimum. Discover how consolidating credit lines can streamline your finances and potentially lift your credit score. Our dialogue with Kelli Green doesn’t just end with tips and tricks; it’s an eye-opener to the harsh realities of a low credit score and the strategic moves one can make in the face of financial adversity. From fostering bank relationships for favorable credit terms to leveraging expert financial counseling, we’re handing you the roadmap to not just survive, but thrive in the world of credit and overall financial well-being.
Emma Banes: 0:00
Welcome to another episode of the Live Better podcast sponsored by Centric Federal Credit Union. I’m Emma Baines, your host and social media coordinator at Centric. Today, we’re shifting our focus to a topic that holds the key to new worries financial opportunities, mastering credit health. In a world where financial decisions are influenced by credit scores, understanding the nuances of credit health is crucial. Join us on this episode as we unravel the mysteries of credit scores, explore ways to build and maintain good credit and provide you with practical strategies for mastering your credit health. Whether you’re a seasoned listener or joining us for the first time, get ready to dive into the essential conversation around credit health. Let’s explore how you can empower yourself with the knowledge to navigate the world of credit successfully. So I want to welcome all of our listeners to another episode of the Live Better podcast, and today we are joined by Kelli Green, who is a credit expert here at Centric. So before we get started, can you tell our listeners just a little bit about yourself and what you do here? Yeah, well, thank you.
Kelli Green: 1:02
I appreciate you having me here. It’s fun coming back on the podcast because we talk about all kinds of things that are really beneficial to helping members genuinely live better. And so I have been at Centric, been in finance probably for about 16 years at Centric almost 12 years and I’m a mom of two. I have a husband let’s see what else is fun. I like to camp. I also love to ensure learning about all these things from a credit health standpoint, because my journey was not as pretty as it looks. Even today. It’s still a journey, but I’ve walked through some really dark times financially, you know, and if I would have had this, I feel like these tips and, you know, just some guidance right, would have looked a little bit different.
Emma Banes: 1:46
Yeah, I agree. So credit is a big topic and, like you said, you know you went through some dark times financially I think we all probably have and especially you know at a young age, when you’re freshly married and you kind of don’t want to clue what you’re doing. That’s exactly right, and the last thing that you know a lot about is credit. Like, what is that? I didn’t learn that in school. I mean, everything I’ve learned it’s kind of just been on my own as time has gone on, and so I think equipping people with this knowledge at a young age is so important to help them avoid the mistakes that we made.
Kelli Green: 2:21
You’re so right and the sooner the better. Yeah, I think you just, in anything that we do, from, like, grocery shopping to paying, you know your utilities. Any conversations that you can have with your kids do that you know, even if it’s they’re doing different tours at home and so you pay them a dollar you know, Well, you just reward them in a ticket, you know, and at the end of the week you’ll get ice-free or something. Whatever it is is just showing them so they can understand. Hey, you know, this is what this amount costs, this is what you know. You make an hour having you stretch that out and then just having the overall conversations. That is that’s critical. You can never start too soon.
Emma Banes: 2:59
Right, and I mean just looking for, like teaching moment with your kids. Like it might just you’re just going through the motions with your bills and paying for things, but like there’s always a time where you could stop and make it a teaching moment. That’s right. Like you know, yeah, we could spend this on this today, but in three days this bill is due. That’s right. So if we do that, you know it might put us in a band in a few days. So I mean just you know talking about those things so they kind of understand what it’s like to pay bills, but anyway. So let’s just talk about credit score. What does it mean?
Kelli Green: 3:30
Well, you’ll hear a lot of people that will talk about credit and why is that important? And to pay cash for all the things. You may hear different scenarios, and I believe in a lot of those things, as far as paying for cash. But the debt is not necessarily a bad thing, right, it’s really not. It’s all contingent upon how well you manage that with the money that you have coming in versus your overall necessities. I don’t know about you, but it would be challenging for me to go buy a brand new vehicle and just pay cash for that. But there are ways that you can work up towards that, and so what does that really look like? And so that’s really where your credit score comes into play, because we never know what future need that we’re going to have. And really and truly, your credit score is just talking about your overall financial journey. It’s how well what your behavior is with money and with, like just the overall capacity that you’ve been given. For example, your credit score is made up of a couple of things installment and revolving. Installment debt is really like a mortgage or a car note, because there’s a fixed amount that’s due at the same time throughout the month. Your revolving is more so your credit cards where you have a particular capacity, your balance on your credit card and that kind of fluctuates. So you have a large sum when you first open that credit card but then, as you start spending well, then that balance what’s available to you that starts dwindling down, and so your credit score really and truly is how well you are paying your bills, are you paying them in full and are you paying them on time. Well, I said, those are the things that are most important when really thinking about your credit score. Interesting enough, when we’re having conversations and going through credit reports with folks, a lot of things I try to explain to them is you want to see your history, the length of time you packed something open and how well you’ve managed that particular amount. So something I always share with folks is if you are, you know, say, you’re opening up several new lines of credit, that’s going to cause your credit score to drop, even if you’re paying your debt off. I would not recommend closing them immediately because it’s going to have a negative impact to your score. So what I mean by that is, if you are paying off, say, three or four credit cards, close those relationships out anywhere between 30 and 45 days in between the other because you’re not doing such a shock, and all to your credit score, right, and so even when it spikes up, or even if it shoots really low because when it shoots really low it takes a little bit longer to increase it but something people don’t realize is that your credit score can drop almost 100 points if you have 30 days of no pay, or late pay late pay, so to speak. So it’s really interesting. You know it’s time is something you really want to pay close attention to you. In the regard of the length of time you’ve had a card open. So I still have the card, the very first credit card that I had whenever I was in college, very first one I ever opened, and I still have it. I hardly ever use it, which is not I won’t say that’s the best practice of doing it, because I just have a lump sum that’s writing out there, but that still tells a you know the creditor that I have the potential to go into that amount of debt. So you have to keep that, you know, in mind. My suggestion is it really just all goes down to the individual when they’re. What is their relationship with money? Are you a compulsive shopper? Do you utilize credit cards to get very the month? Is this the way that you are really trying to bloat yourself? You know, essentially, I think that’s a dead end road. Right, I’m heading into disaster. So those are some things to think about Now. Are you looking at, say, hey, you’ve got a credit card and you’re in this time frame, right now we’re having double rewards points Usually we do that a couple of times throughout the year at Centric but are you just trying to put everything on your credit card just to accumulate those points, to use those for later on throughout the year, or even now for Christmas, and you have full intentions of paying off that debt at the end of the month? That just goes back to the person. And what is your cash flow like throughout the month? So, really, truly, your credit score tells a lot about your behavior, your relationship with money. Right, right.
Emma Banes: 8:00
But this is the way I kind of look at it. You tell me if I’m wrong. So I kind of think of credit score as like a grade in a class. I mean your grade in, say, your math class is going to tell anybody who looks at it for the most part how well you know that subject, and I mean this is kind of the same thing. So I guess your credit score could be more like what is your mindset with money, like you said? Are you using it to get through the month and pay your bills or are you using it more as a tool to give you advantages for things in the future?
Kelli Green: 8:35
And it’s just, it’s very interesting. Especially with inflation and I know that we actually talked about that a few months ago I realized that the cost of things has increased dramatically, and so I do understand that. But that’s when you really need to think about. Okay, hopefully, inflation, things will kind of start leveling out a little bit. But what are you doing so that you’re not continuing to create a future problem for you and your family? You accumulate a lot of credit card debt that’s going to strap you for the future. So, yes, it might feel good to go get that compulsive buy here, you know, right around the holidays, or even back to school shopping, or, you know, going on a vacation, but if you plan for those kind of things, it really won’t bother you. Some that always share with folks is if you’re using your credit card and say you’re going, you know, oh well, I don’t have a whole lot of money, I’m just trying to get through the last couple of weeks of the month, or one how many, you know and you go in and you say, hey, I’m going to use this. I’m eating lunch every week or we’re going out to dinner. This will be a little splurge If you’re not intending on paying that off at the end of the month. Think about that. That meal just sustained you for how long? Probably a few hours, right? Right, I’m hungry. That export us six hours, yeah, but you’re going to be paying on that debt and you tie on interest, Right, Neil? That was $50 for your family of four. You tag on you know an interest rates on credit cards or anywhere from God. You know, the lowest ones I’ve seen are here at Centric right, and so they start, you know, anywhere between 11, 12, 13%, and I’ve seen them all the way up to 30 and 40%. That’s outrageous, yeah, so it’s. That’s the thing I always share with people. You know, your credit score is something that is so incredibly important. Everything you do, the way you spend your money, the way, um, whether you’re saving or you’re paying off quickly, even if you can’t I would say you can’t pay off a full debt make a payment. Do you have something there? You know? But, um, but it’s just, it’s so incredibly important for us to make sure you know that you’re making those timely payments. And just think about, like, is this a real necessity, Is this something you absolutely need? And you’ve made a plan to pay that off at the end of the month, or you have a plan to pay something. Right, you know that’s, that’s something that you always encourage folks, because not paying at all really, you know, hurts your credit score but, when you can pay something that doesn’t hurt it as badly as it certainly could if you just avoid the payment, all the day, right.
Emma Banes: 10:56
So let’s talk about so. Let’s say, once you have tanked your credit score, what does that mean for you in the future? Like, how does that tie your hands? What are you not able to do once your score, you know, reaches?
Kelli Green: 11:10
below a certain point. Well, so this is really interesting. We actually work, we pride ourselves on at Cendric, really helping members who are incredibly credit challenged. Some people think that bankruptcy is the only answer, and it’s genuinely not the only answer. We believe in relationship lending at Cendric and while, for example, if we say, hey, you’ve got a goal of wanting to get you a car, okay, and you say, okay, I want this particular type of car, well, do you have any cash that you might want to put down on that vehicle? Okay, so those are some things to think about. So you’re looking at. That is a commitment, not only for me. That’s your cash, you put on that vehicle and we will come halfway and see what we can do for you, you know, as far as helping you achieve where you’re wanting to be with that. And he um, that does two things really and truly. One, it shows us that you’re really bawled in right, you have skin in the game. You’re with people talking about that. Um, the other side of that, too, is the more you’re able to put down, the less you’re having to finance, which means you’re going to pay less for that particular vehicle. So one of the things you know that I really try to share with folks, too, is just when they’re thinking about this from credit and really managing you know your, your credit score. There are ways to really enhance your score and, like I said, it depends on why your score is that way. Is it because you have opened up multiple, you know new lines of credit and you’ve max out all those credit lines? Um, or do you have credit lines that you have opened and maybe you know you just have a balance on there and it’s just been lingering for a period of time and you’re just paying kind of what you can? It just, it all depends for folks, you know. But something that I would share is you know, one of the things you can do that would just like flip it upside down one call. The creditors always stay in communication with the UO. Just always do that when they can reach you and you can reach them, it’s a really nice relationship. Contact them and say, listen, I’m going to bond, can we get in a payment plan? Because we talked about that revolving and installment that perhaps you know if you’ve got. If you don’t have a really good mix of both installment and revolving installment or those speak statements the revolving is that credit line where it kind of looks white. So I would say, maybe take a look at that. You sit down and the credit, the credit officer and they will actually take a look at it here at Centric and say, okay, maybe you have a whole lot of revolving, a lot of credit cards. Perhaps we can consolidate that desk right and put that into an installment. So then you’re getting a good mix of credit. Just keep in mind, if you’re closing out those scores right, when you’re closing out those cards or lines of credit, in a short period of time your score is going to be shocked but you’re going to trend upward and that’s what you want to see happen. There’s just so many different things that can happen there. If you don’t have a mortgage, a lot of times, if you want to ever really reach your 800s, it’s kind of challenging to do that. I would also say, too just be mindful, is this debt yours or are you a co-borrower with someone else? That’s where we see a lot of our folks really get into a bond, a financial bond with their overall financial trajectories, because they’ve decided, hey, I want to co-sign on this vehicle, or I’ll have someone as an authorized signer on my line of credit, and there’s not a lot of control that you have in that, right.
Emma Banes: 14:31
I mean you’re completely dependent on how the other person handles that at that point. So I mean there’s got to be a lot of trust there.
Kelli Green: 14:37
It does, it really does. So you just have to think about it. There’s several different situations. Are you on the brink of bankruptcy because you’ve extended yourself, overextended yourself and every line of credit you have is completely maxed out? That’s a conversation to have with the creditor, and I would definitely take a look at seeing if you can consolidate that particular debt when you have the relationship where your direct deposit is going and people us here at the credit union can really see how you’re managing your money throughout that month. That’s critical because we’re able to see okay, we know what you’re making, we know what you’re bringing home and how are you managing that, because not only whenever we’re counseling you on what we can do from a long side, we’re building a budget for you. Okay, can I really afford this new loan? Or this is the financial situation that I’m in Can’t get a new loan right now, but we might be able to remove a few things for a short period of time so that you can start putting funds towards paying down your debt. It’s going to look a lot better. I’ve told this story something times ago, when my husband and I got debt free. We were first married and we had our first little girl and we just had a mound of debt. We had a vehicle One was paid off, but one we actually still owed money on and we had two credit cards and a student loan. So we had right at probably $15,000 in debt. Well, to some people it does seem like a whole lot. We had a mortgage at the time too, but what I’m talking about is let’s look at this debt that we can probably tackle. I won’t necessarily say this is your highest interest rate. I don’t really look at it in that regard. We genuinely here at Cedric follow very similar to what Dave Ramsey has to offer, as opposed to the snowball method is just what he has. We want you to get to the point where you can pay cash for a car, but we do realize that that is not necessarily. It’s not realistic for everybody. When reference to Dave Ramsey, I wouldn’t have to definitely say that. But what we actually did is that we just started tappin’ our debt from smallest to largest and we just cut out everything. We cut out any extra dining out, we took our watch to work, we ate at home all the time, we didn’t have cable, we didn’t have internet at our house, you know, I mean we just did a whole lot of different things. That sacrificed we did, but it was for a very short period of time and it was right, at about 14 months, that we were able to pay off that debt. We did not take on any promotions. We did not take on any of the debts. We did add a child to our income. So we had two babies within the summer frame, and one of which was very, very sick. So we accumulated a lot of medical debt for her. So it’s a lot of things for us to really manage and how do we work for that? We were still able to do that, you know now. You know you work back up to that. We sold off a vehicle. You know we pay cash for a vehicle but we got, you know, just one to get us from point A to point B. Right, didn’t have air. You know there’s an AC. We just kind of bare bones it. But I would never, I would never trade that time for anything, because it’s something that really made us realize what can we achieve in life with doing without? And it’s freeing really and trying to do that and it makes you realize it’s just like this is a waste. But you know everybody has their own thoughts and so forth, but the majority of the time when I sit down on top of people, you know. As far as the other credit and how, our ways in which they can really improve it, it’s our day-to-day spending.
Emma Banes: 18:05
And I mean, I think that’s why it’s so important to utilize the free financial counseling that we have here, because sometimes all it takes is just a fresh set of eyes on the money, but you know when it’s yours and it’s in and out of your account all throughout the month. Sometimes you just need a fresh perspective to say do you really need to do this four or five times a week, like you know?
Kelli Green: 18:30
And it makes really and truly I mean talking about finances too and especially if you’re looking at it, like you just said, in Medan and Day Out, you know, and every month you know, oh my God, Then you start getting disgruntled. Righties are now you make it disgruntled about your job or your relationships with people, you know, I mean, and it starts impacting all the things in your mental health and your well-being and it’s like it’s just not worth it. No, it’s genuinely not. And, like you mentioned, it’s free to talk to us. It’s completely free. So if you can’t come to one of our locations, you know we always say, hey, we’ll do it via Zoom for the. We can do that via, via banking, through, you know, MyCentricConnect, you name it, and there’s just even over the phone and we can, you know, securely email you your credit score if you want to see what that looks like. You get a free copy of your credit report. We give you a free copy of a budget. I mean, you name it. It’s why not do that Right?
Emma Banes: 19:24
I mean, the tools are available. Oh yeah, right here it’s great, and your tips. One thing I did want to talk about, so the different types of credit accounts. So we’ve talked about like mortgages and car notes and things like that, and then credit cards Are there, one that affects your score more than the others do I mean.
Kelli Green: 19:43
So, like we mentioned earlier, as far as the mortgage, you know, having that on your, on your credit report, that’s a wonderful way for you. If you’re paying in full right and on time right, those are ways in which you can really achieve like what folks refer to as like a perfect score, so to speak. I will say this there is not one product or other necessarily that is better or best, just genuinely the relationship you have. It’s the length of time that you’ve had those accounts open, right, Give it a little bit of life. You know, that’s what I always share with folks. The other side of it too is, you know, as far as paying on time. So that’s why I mentioned them about earlier. As far as the length of time that something’s open, I still have my off very first credit for it. I have kept that open because that is when I first established credit. So my credit is dated back to when you have that very first line of credit, whether that be installment or revolving debt, but that is when you established credit. So I’ve kept that open. The length of time, obviously, and also to the time in which you’re paying. So if you’re a late pay or no pay, that’s going to impact your score drastically. So while talking about, it’s really the relationship, right, and the behavior, and I mean, if you’re a late pay, no pay, it’s going to cost you, true, because you’re going to pay more. So say, for example, in my, you and I are buying the same vehicle right, it was Dax and car or house, even you know, whatever, depending on what, if you have better credit than I do, you’re going to come out better. I’m going to pay more for that. You’re going to name house. Same way with utilities. A lot of folks who know really struggle where they’re getting started, you know, say, hey, they’re having to move, they’re not prepared to pay different deposits and so forth. If you know of a lower credit score, you’re going to have to pay. You know a higher deposit If you have a very high credit score and a positive overall credit rating, you may not have to pay a deposit at all, right, so you know those are some things. A lot of times I mean, you know, there it could be the difference between yes and a no of getting you know whether that’s at new loan or what that looks like. Remember here, et cetera, when we’re talking about these things we don’t want to give you a hard. No, we want to explain the why, and if you still have this desire, then let’s get you there.
Emma Banes: 21:59
Right, let’s, but we might have to take a couple extra steps along the way. That’s right. The segway, right. Yeah, that’s awesome, I mean, and people appreciate that too, I think when you have a financial institution who’s not just, it’s not a hard no, right, like no. I’m sorry, you know, try later, try again later. It’s not right now, but I can help you get to where you need to be so we can make it a yes, that’s right.
Kelli Green: 22:24
It’s important, it is very important and that’s why I always say you know, that’s why I want to make anywhere else, because if I come across, you know we haven’t. If we have financial hardship or something like that, I want my funds to be here. I want them to know the relationship that I have with my money and then, if I need to be extended credit, I just feel confident that they will walk me through a year and what it is that I need to do. Right, and not only that. I mean you’re going to pay your lowest credit score or even the lowest credit rating here as far as the firm interest rate, and then if you have funds that you can say, bring me in every single month, we pay you just to have your check it account here. You’d then buy like the highest earnings and then also the lowest amount that you’re going to pay back. It’s just a no brainer to me, I agree for sure Before we wrap up.
Emma Banes: 23:10
Is there anything else you want to add? Is there anything that we didn’t talk about, that you wanted to kind of mention?
Kelli Green: 23:15
No, I just really want to reiterate the importance of having a conversation with folks about this. I mean, it is literally one of the best decisions that you could ever make is when you just say, hey, I need to hit reset and right now is the perfect time to do that. You just kind of start thinking about what are your overall goals, what does your really overall debt look like and how do you move to the next step? You may not have a goal. You may not have a financial goal. Talk was one of our credit counselors. They’ll help you do that and it’s free. You can talk to somebody either by phone or even in person from eight to six every single day. You want to schedule an appointment to do that? Virtually, we can also do that. Our Live Better program is something that we work with our small employers. Where we actually go, we have a team of folks that goes into local employers and we host different workshops and a gift that we offer to them is one on one with their employees to discuss budgeting and just do an overall financial help chat. And I highly advise that you can reach out to us online. I know there’s so much information to it in our show notes that you’ll be able to share, but please reach out to us and just let us know how we can help. Talking through these kind of things is the best gift you can give yourself. So thank you, emma, for having me.
Emma Banes: 24:31
Well, thank you for coming on and, yeah, really, really good topic. That wraps up another episode of the Live Better podcast focusing on mastering credit help. We hope you’ve gained valuable insights to navigate and improve your financial wellbeing. Remember your credit. Health is key and Centric is here to support you on this journey. If you found this episode helpful, please subscribe, share and leave a review. Your feedback shapes content that directly addresses your financial needs. Keep the conversation going on social media. Connect with us on Facebook, at Centric FCU and on all other platforms at MyCentric. Stay updated on the latest insights and resources tailored to help you master your credit health. Centric is your dedicated companion on your financial journey. Thanks for being part of the Live Better podcast community. Until next time, take care and prioritize your financial wellbeing.
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