In March 2019, the U.S. Federal Reserve cited that there was over 4,000,000,000,000 dollars of consumer debt outstanding. Yes. You read all of them zeros correctly.
Consumer debt is the class for all non-investment purchases financed with credit. Some of these purchases can include, but are not limited to: buying a house, credit card purchases, purchasing a car, or funding college. In all of those circumstances, the status of your credit will be a topic of conversation. I'm sure most of us have encountered a circumstance where we were specifically asked about our credit. Were any of the following responses your answer?
"I don't know!"
"I am working on it."
"I think it's okay."
"What is that?"
"So and so jacked my credit up!" I've heard this one too many times to count.
"I don't have any."
Even if you follow the David Ramsey doctrine and have decided to pay cash only for all of your purchases, there are still situations where your credit can come into question (i.e leasing an apartment, turning on internet service, applying for a specific job, ect.).
If you're like me, you grew up hearing and seeing the effects of lack of knowledge and bad debt management in your community. You hear stories of cable bills or credit cards being placed in so-and-so's kid's name. Payday loan companies are a regular part of money conversations. You see posts seeking recommendations for places to stay that don't require a credit check. Low-income employees will pay fees to cash their checks at the pawn shop or local store, because they have bad credit with the banks. You learn the ways to avoid vehicle repossessions and debt collection calls before you even learn what a credit score is.
How is it that credit affects so many aspects of our lives, but so little information about it is known to the general public? How many of us learned about credit in K-12? What about when you went to college? Did your parents teach you about it? Nothing? That's crazy, right?
I can't be the only one who feels like we're being set-up for financial failure.
Okay, now that we can agree that there's a big gap in credit/debt education in our society...what are we going to do about it?
Well, you can't talk financial literacy without including the basic knowledge and understanding of how consumer credit and reporting works. That is why you can look forward to benefiting from plenty of content teaching and discussing credit with FHF. There are plenty of people who teach the "credit is the devil" content, so forgive me for skipping that in the FHF curriculum. Rather than preaching abstinence, because that works so well with sex ed. lol, I will share the foundation of how credit works and some things that you can do to improve it.
The first step to improving your credit situation is knowing what that situation is. Don't be alarmed; it's easy-peasy. Go over to https://www.annualcreditreport.com/ to get a FREE credit report. My personal suggestion is to only request ONE of your reports initially (i.e only the Experian report). This will allow you to spend some time learning and reviewing that report FIRST. Then, in a couple of months, you can order one of the other bureau's reports and check your progress. Again, that website above is COMPLETELY FREE and is recommended by the Federal Trade Commission.
Finally, don't forget to hit that sign-up button to join the FHF family and get all of awesome, upcoming content FIRST. If you made it this far, hey boo. Thanks for dropping by.
If this helps you or a loved one, don't hesitate to pass it along.
With love always,