Credit wellness

TAMRA CLARK CHAMPION: Hello, and welcome to our video around credit wellness, presented by U.S. Bank Goal's Coaching. We're glad you're here. 
Let me do a quick introduction. My name is Tamra Clark Champion, and I've been a goals coach with U.S. Bank for the past three years. I've been in the financial services industry for over 20 years, and I hold three coaching certifications. One from IPEC, one from the International Coaching Federation, and one from the Institute for Integrative Nutrition, as a step in my own personal journey to wellness. 
Now, as I mentioned, I'm part of the U.S. Bank Goal's Coaching program, and as a goals coach, I provide financial education like this, but I also help clients one-on-one to build self-awareness and promote habit changes. And we do this by offering professional guidance and support to help you achieve your personal, financial, and professional goals. And all of it is available to you at no cost, and during 100% confidential sessions. 
Now, we use coaching and behavioral science to help you build a strong foundation to support you in achieving your goals. And today, we're going to be talking about credit wellness. And many of the goals that you see here on screen are ones that some of my clients have when they come in talking about their credit. 
It might be buying a home, or they're looking at adding an investment property to their portfolio in the near future. Maybe they're even thinking about growing their family, and they want to make sure that they have things in order financially for that, or they're thinking about pursuing a passion, or starting a business. And credit is going to play a key part in all of those. 
Whatever your financial goals are, credit is going to be key to achieving them. To make your dreams a reality, you'll have to set a goal and make a plan to get there. So if you're ready to go from dreaming to doing, it might be time to talk to a goals coach. And I'll tell you more, at the end of the video, about how to get started, but let's jump into credit wellness. 
Think of your credit wellness as a journey. It doesn't matter where you started, or what path you followed. What matters is that you're right here, in this moment, taking steps to learn more about managing your credit and growing your confidence. Because credit wellness isn't about having a perfect credit score or perfect credit history. 
Some of the best wisdom in our lives come from experiences, good or bad, whether they were our own choices or situations beyond our control. And the best thing that you can do is to learn from your past, and know yourself, and what affects you, and then continue to move forward. 
Credit is very complex, and it can be confusing if you don't know much about it. So today, I'm hoping that this video will equip you with some information and knowledge that will help enhance your credit life. And we're also going to take some mystery out of the path ahead and arm you with some solid tips that we give to our coaching clients. So let's start with the reasons why you probably are here and care about your own credit wellness. 
It feels really good to be confident and secure in your money. And there's also some really practical benefits to caring about credit, because the higher your credit score, the more options you're going to have to get credit when you need it. 
For example, maybe you want a mortgage to buy a home or a loan to finance a car. Those lenders will use your credit score to help them decide how likely you are to pay back any money that you borrow. You might also be able to obtain lower interest rates if you have a higher credit score. A percentage point here or there can add up to a lot of money over time. And if you're not using that money toward paying down debt, you could spend it on things that bring you joy or help to put money away for the future. 
And there are also factors beyond just money, because landlords will often pull credit reports to determine a renters eligibility. And if you have a low credit score or a spotty credit history, you might actually be asked to pay additional security deposit, or you might even be denied the housing that you want. 
And in fact, employers can also look at your credit report, sometimes, and use this as a way of determining whether or not you're reliable and/or maybe a risk, depending on the type of job you're applying for. In my experience, in banking, for the last 20-plus years, every job that I've applied for required a credit history, required them to pull my credit history. 
And thankfully, we don't know of any dating apps that pull your credit report, but your credit is something that can affect your relationships, and even your level of stress and satisfaction in life. If you get married or you merge households with someone, your credit is then connected. And if one day, the two of you want to turn your passion into a full-time business or a side hustle, good credit will be key. 
And while money isn't everything, splurging on a nice vacation here and there, or some other way of finding joy in your life, can be a great reward for making good financial decisions along the way. 
So where can you start? I'd suggest knowing what your credit score-- your credit looks like, as a first step. Start with reviewing your credit reports. You really need to know what's in those credit reports, as well as what your credit score is. 
Now, there are three credit reporting bureaus, TransUnion, Equifax, and Experian. And credit scores can range from a low of 300 to a high of 850. Now, we typically recommend that clients pull a free copy of their credit reports at least once a year, and this can help to reduce fraud, and also ensure that you are aware of your credit scores, any debts that you have, and also your credit worthiness. So put a reminder on your calendar to order yours. 
Now, obviously if there's been some sort of fraud on your account, we'd recommend that you do it more frequently than that. But you'd be really surprised at what you can discover on your credit report. For example, you can see how many accounts you have open or have ever had open, what the balances are, or if they're paid off, and any missed or late payments, as well. And all of these things are considered by your lender when they look at your credit history. And they also factor into your overall credit score, which is known as your FICO score. 
Now, I want to talk to you about five pieces of criteria that lenders are going to use to determine your credit worthiness. 
When you know what a lender will look for to determine your credit worthiness, that's going to be really key when you apply for that loan that you need. And it's helpful to know what they're looking at, but also why it's important. 
So the first of the five C's is Character. Lenders are going to look at your bill payment history to determine your financial reliability. 
The second C is Capacity. Your employment and your borrowing history is going to help lenders know if you have the ability to repay the money that you're borrowing. 
The third C is Collateral. Collateral is considered the specific property that you have to back up your loan, and this provides a lender a little bit of security for repayment. 
The fourth C is Capital. These are the assets that serve as backup to the loan. And they also help a lender to know your net worth. 
And then the final of the five C's is Conditions. Now, conditions are economic, and they maybe have to do with the market. The lender is going to factor these in, but these are typically external factors outside of your control, in terms of conditions. 
Now, let's talk about how you could use a new loan or a line of credit to make a positive impact on your credit score and history if you're trying to build up your credit. 
I mentioned earlier that your credit score can range from 300 to 850, and the higher your score, the better that your credit is considered to be. Now, for each of these components that we're going to talk about here, I want you to know, by the Plus sign, how you can drive your score up, and then the Minus sign shows how you might lower it. So we're going to also offer you some tips that I give to clients as well, as I go through each of these. 
So let's talk first about payment history. If you pay your bills on time, this is going to help increase your score. Whereas if you have late payments on your accounts, it's going to cause damage to your score. 
And so my tip here is to reduce friction by setting up automatic payments for your bills. That way, you don't even have to think about it. 
The second one here is outstanding debt. While the use of your borrowing power will help you build credit over time, you really want to be careful to stay under 30% of your total credit limit. 
And my tip here is to have a budget. If you have a budget, you're more likely to not have to rely on your credit cards for monthly recurring expenses, right? So budgeting is a great way to stay within those healthy ranges for your debt, and ensure that you're not living outside of your means. 
The third one here is credit history. The longer that you've had one or more lines of credit, the better you look to a lender. It equates to experience with credit. However, you want to be wary of opening multiple new accounts all at once because this reduces, what they call, your average account age, and it can negatively impact your score. 
So the tip here is to review that credit report annually, at minimum, to be sure there aren't any surprises on it, whether it might be a collections on an account or fraud. Your credit is an asset that you must protect. 
And in terms of credit types, a lot of people don't know this, but credit cards and installment loans are unlike mortgages and car loans. They all represent different types of credit, and you really want to have a well-balanced mix of different types of credit over time to build your credit. 
So avoid having, for example, too many credit cards, and consider other types of lending. If all you have is credit cards, maybe consider getting a jewelry loan, or a personal line of credit, or something along those lines. 
And my biggest tip here, from the coach perspective, is to never borrow more than you can afford. Always ensure that you do your research, you use an online calculator or some other type of tool to estimate what your payments will be, and make sure that this is something that fits into your budget. 
And then the last one on here are recent inquiries. This is something that clients ask about a lot. Is it going to hurt me if I look at my credit or I pull my credit reports? 
You want to be thoughtful and strategic about applying for credit and what you finance, because too many applications in a short amount of time can hurt your credit. So make sure that you're planning ahead for large purchases and doing your research to determine the best option for financing if you want to go that route. 
Now, let's test your knowledge here, do a little trivia. So play along with me here. Because if you don't know what can affect your credit score, you're not alone, which is, I'm guessing, why you're watching this video. 
And I have an app on my phone to allow me to monitor my credit score, and sometimes I'm surprised by what will make my score go up or go down. And so I'm going to throw some different things up here on the screen, and as I do, I want you to try to guess whether or not you believe that action could hurt your credit score. 
So the first one, checking your own credit score. I get asked about this a lot. 
And the answer is no, this is not going to impact your credit. Now, when a lender-- potential lender pulls your credit, if you have too many of those inquiries at one time or in a short period of time, that could negatively impact your credit. But you checking your own credit score does not negatively impact your credit at all. 
How about making late payments? Do you believe that late payments could hurt your credit? 
The answer is yes. You want to make sure that those credits-- excuse me-- those payments are on time. So this is another reason why I often suggest to my clients to set up an online bill pay or automatic bill pay so that those bills get paid on time. No guessing. You just set it and forget it. 
What about overdrafts on your checking account? Do you think that those could impact your credit score? 
The answer is no, but there's a little bit of caveat here. While the overdrafts don't impact your credit score, they might impact depository reporting for things like check systems and early warning services. So try not to get overdrafts on your account, but also know that if it happens once in a great while, it's probably not going to affect your credit too badly. 
What about a bill going to collections? Do you think that this will negatively impact your credit score? 
I hope you said yes, because that's the answer. So again, make sure that your bills are getting paid on time. 
How about credit applications for lending? I've touched on this a couple of times, but yes, too many applications in a short period of time could make your credit score go down or affect your credit score. Doing one once in a while is going to be just fine. 
And looking at multiple lenders for options is OK too, but try to choose maybe two or three that you feel good about before you actually allow them to pull your credit. 
How about a non-bank loan? 
The answer is no. Borrowing money from mom or dad or grandma or friend isn't going to impact your credit score. 
What about getting a parking ticket? 
No, a parking ticket is not going to affect your credit score. 
How about court-ordered child support? 
The answer to this one is yes, that can actually affect your credit score. 
How about getting close to your credit limit? Let's say you have a limit of $10,000, and you're creeping up there, and you're at $8,000 or $9,000. Do you think that could impact your credit score? 
The answer is yes, right? Again, going back to something I said earlier, you want to try to keep your usage of your credit accounts to 30% or less. 
And then the last of these, closing your oldest credit accounts? 
The answer is yes, because when you start to close your accounts, you might see your score dip slightly. So this one has a caveat, as well. It might dip, but after about 30 to 45 days, the difference in your debt-to-income ratio will help to level your score back out, so you'll be OK. It will readjust itself over time. 
Thank you for playing along there as I put some trivia questions up for you, and I hope these were helpful. I want to wrap up for you what we've talked about, and leave you with five key tips for credit wellness that you can take with you. 
And the first is to know where you're at right now, know your starting point. Get a copy free copy of your credit report, and you can request that from a website called annualcreditreport.com. And again, that's annualcreditreport.com. That is a reputable site that you can get free copies of your credit report. 
And in fact, they are required by law to give you one free credit report per year, but right now, they're offering them to you free every couple of weeks because of the amount of fraud going on. So go out there to annualcreditreport.com, get a copy of your free credit report and take a close look at it. 
The second tip here is to check that score regularly. And remember, if you can set a date, reoccurring date on your smartphone calendar or tie this to a date maybe like your birthday or a birthday of somebody that you love, every year you'll remember to do this each year or on a regular basis. 
The third tip is to build your credit over time by using it responsibly. So touching on something I said earlier, when you have a budget as a foundation, you can use that as a guideline for your spending. And have your future financial goals set ahead of time, which is going to help you to stay within the means that you have and live a good life financially, have the things that you need and want, but also be saving for the future. 
The fourth one here make timely payments. I can't say this enough. Use autopay, or a bill scheduler, or good old fashioned spreadsheet to plan out your payments and ensure that you make them on time. 
And then the fifth tip is to be debt conscious. Don't borrow more than you can afford. Save for your future financial goals. 
If you do have debt, make a plan to resolve it. And if you need a little bit of help to make a plan or if your credit needs some TLC, we are here to support you. In fact, U.S. Bank offers a free goals coaching service to help you make a personalized plan of action for tackling debt or planning for your future, whatever your goals are. And you don't have to be a customer to take advantage. 
This is a complimentary service that we offer, and everything that you discuss with a coach is 100% confidential. So initially, you can schedule using the website on the video here, usbank.com/coaching, or scan that QR code with your phone while you're watching the video, and you can go and set up either a 15-minute intro session with a coach to meet them and find out what to expect as part of the coaching process, or you can schedule a one-hour goals discovery session, where you dive right in, and we start putting structure to your goals during that first conversation. 
And here at U.S. Bank, we have six coaches on our team, each with their own unique background, but all of whom are committed to helping you make meaningful progress towards your goals. So I encourage you to go to our site, read our bios, and consider scheduling with one of us. 
We are trained in behavioral science and goal achievement, and we know what it takes to strengthen good habits and replace less than helpful ones. We also know what it can mean in terms of the difference to have support and accountability when you're trying to tackle your goals. 
And as coaches here at U.S. Bank, we have access to a variety of subject matter experts and resources that you can make use of, whether it's a financial component, service, or tool that may help you. And whether your goal is professional, financial, or personal, we can help. So I really hope that you'll consider us. 
And with that, I want to thank you for watching this video around credit wellness. And I hope that you're taking something valuable away to help you in benefiting and building or rebuilding or establishing your own credit. You've got this. Thank you so much for joining me.