What’s Credit? Clever Girl Finance’s Tips For Credit Management

January 24, 2019

Bola Sokunbi is a financial education instructor who had an understanding of finance at a young age. Her father was the breadwinner of her family and managed home finances, and her mother hustled multiple jobs from investments banker to hairstylist to assure her own financial independence and stability. A large portion of her dad’s finances centered on getting three of her older brothers through college in the U.S. Bola, originally from Nigeria hoped to follow the education footsteps of her brothers, but when it was time for her to venture off to college her father was forced to enter into early retirement and did not have the funds to put her through school.

Her mother, determined to get her into college abroad paid for all 4 years of  her college tuition in the U.S with her savings. At this moment, Bola realized what it meant to have finances, save up finances and spend finances at the right time, for the right thing.

But even after grand scheme money lessons from her family, she still experienced financial challenges on her own. At a time where credit card companies attended college fairs, Bola, as many young adults did signed up for cards, and the debt hit her just like it would for anyone else. In fact, she maxed out her first card and garnered an interest rate of 24.99%. She lost money in investments whilst attempting to invest without true knowledge of how to invest, and, was undoubtedly a handbag collector.

After each tough money lesson, Bola did the work to repair her finances – but she  noticed that there were not a lot of financial resources help for women of color. After looking around her, and even deeper into the financial struggles of her friend circle, Bola left her corporate job to create Clever Girl Finance, a financial education platform aimed at providing women with financial guidance.

Bola chatted with Girls and Mimosas on of the most daunting elements of finance: credit.

What Are The Biggest Mistakes People Make With Credit?

Not understanding financial goals

Are you opening a credit card for an emergency purchase, or is it for leisure? What timeline are you giving yourself to pay off the card, based on your realistic financial needs? Many times we open cards and do not stop to think, what are we really using the money for?

Opening random cards for immediate fix

Have you opened a card for the sole purpose buying an outfit or expense to solve an immediate need? Bola says this is no bueno. If you’re opening a card, open it for a long term purpose. Find alternatives to an immediate fix.

Being mindful of opening new cards

How many accounts do you have open? Are you paying down on all of your cards? We’ve all been there where we walk into a store and sign up for store card, without understanding the long term implications of opening that card.

Not educating oneself

This is pretty straight forward. We open cards and sign up for accounts, without fully doing our research on the things we should be looking out for like interest rates.

How Long Do Reports Stay On Your Credit Report?

Missed payments, charged off accounts, and collection accounts stay on your credit report for seven years. The good news is missed payment dates will not substantially impair your credit score after a a record of consistent payments.

What’s The Difference Between Equifax, Experian and Transunion?

All three of these are credit report bureaus, but the difference between each is the model they use to calculate that information, which  may result in a difference in credit scores. Some lenders send information to all three bureaus, while others may not. Additionally, the scores may be from different dates, and since our credit scores can change at any date, if you are not looking at the same report date under each bureau it may vary.

What Are Some Credit Card Myths?

Utility bills affect your credit score

Wrong, they do not. However if you miss frequent payments are sent to collections, missed collection payments will show on your credit report and ultimately lead to a drop in your credit score.

Taking on a lot of debt is good for credit

Again, wrong – it is not. Keeping a little money on card to show that the card is active is not the best solution to building credit. Card terms and conditions can change, and interest will still accrue on the account. Pay it off!

What Should New Cardholders Be Mindful Of?

Limited time offers

Pay attention the fine print and terms and conditions of a card. Cards may have service fees after a year, or potentially increased interest rates after a year.

Increased interest rates

When your bank sends you emails, read them! Interest rates can increase, so stay alert to see how your account can change.

What Resources Does Clever Girl Finance Offer For Financial Improvement?

Clever Girl Finance offers almost 30 course aimed at improve finance and credit like budget finance, implementing financial management skills and being consistent with a financial plan and more. The course catalog is updated on a monthly basis.

For more information of Clever Girl Finance services, visit CleverGirlFinance.com

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