Part I -- Understanding Your Financial State of Affairs
by Yvonne Brown, LFS
Know Your Credit Rating
Believe it or not credit is what drives this country. Without good credit, it is difficult to purchase a car, buy a home, get financial aid for school, or even open a bank account. In particular, people of color have to strive twice as hard to keep good credit, because many times, we have so many other things working against us like income, education, where we live and the color of our skin. What this drives many of us to do is to resort to paying for everything in cash (which is fine if you got it like that), or using what I refer to as the legal "loan sharks" . . . you know those title loan companies that charge you exorbitant interest rates (30%+) if you bring in your car title, and some even resort to such unscrupulous means of financing and paying for things through illegal means. Many of us (including myself) have taken our credit rating for granted, believing that either we have good (or ok) credit or that our credit is so bad, we'd rather just ignore it and hope it goes away or fixes itself in 7 years. In another segment we will get into understanding your credit report and things you can do to repair bad credit.
The problem is credit card companies solicit our young people while they are in college to lock them in to credit at a young age because they know that the vast majority of people who have credit cards carry a balance. The longer you carry a balance, the more profitable you are to the credit card company. Case in point. . . You charge $2000 on a credit card with an 18% interest rate. If you pay just the minimum monthly payment of $35 due each month, it will take you about 10-1/2 years to pay if off. This is assuming of course, that you make your payment on time. Late fees on credit cards run upwards of $25 a month, and making late payments (even one day late) now affects your credit score. You make several late payments and before you know it you're just stuck in a vicious cycle with a balance that never seems to decrease from month to month and a declining credit score. The larger the balance you carry, the longer it will take you to pay it off and the more money you will pay the credit card company over time. Yikes!! What you purchased for $2000 (making just the minimum payment monthly), will end up costing you $4,410. Hello!!! I can't believe that this is what God wants for our lives. Jesus states is Luke 12: 42 that we are to be faithful and wise stewards. Carrying a lot of credit card debt is not being a wise steward. And, some of us wonder why God does not provide us with more financial blessings, well consider that it may be because we haven't learned to manage the little that He has already blessed us with.
So what can you do?? The first step is to find out what your credit score is. If you have a good credit score, Praise the Lord! Keep up the good work. If your score is below 650, you have a little work to do. As stated previously, we'll cover understanding your credit later. For now, I would suggest contacting the 3 major credit bureaus (TransUnion, Experian and Equifax) to get a copy of your credit report. You can do this online or you can call them directly to request a copy. Recent legislation passed by Congress will allow you (as of September 1, 2005 in the northeastern U.S.) to be able to request a free copy of your credit report once per year. Currently, you can get a free credit report if you've been turned down for credit by contacting the reporting agency within 90 days of being turned down. Otherwise, there is a fee to get a copy. With so much fraud and identity theft (topics we'll cover later), you definitely want to make sure you understand what's on your credit report.
Let's strive in 2005 to be better stewards so that we may be prosperous and successful in both our spiritual lives and with our financial affairs.
For more information on obtaining your credit report, contact one of the credit bureaus listed below:
TransUnion - www.transunion.com
Experian - www.experian.com
Equifax - www.equifax.com
Please forward your questions or comments to yvonne@glasshouseministries.org. I will respond to as many as I can each week.
© 2005 Yvonne Brown for www.glasshouseministries.org
