Budget Divas

Mastering Your Credit Score: Strategies to Improve and Sustain Your Financial Health - with Rhonda Alexander Monkres

August 16, 2023 Episode 68
Budget Divas
Mastering Your Credit Score: Strategies to Improve and Sustain Your Financial Health - with Rhonda Alexander Monkres
Show Notes Transcript

Ep: #68 Picture this: A world where your dreams of homeownership are no longer distant aspirations, where the car you've always wanted becomes an achievable reality, where unexpected financial emergencies don't send you into a spiral. This world is within reach, and it starts with understanding and improving your credit. 

In this episode of the Budget Divas podcast, Rhonda Alexander Monkres, the credit coach and owner of Kūpa'a Consulting Services, discusses the important topic of credit. Rhonda shares valuable insights and tips on maintaining, establishing, and improving credit scores.

Rhonda introduces herself as a credit coach based in Maui, with a mission to help Hawai'i residents improve their credit scores and achieve their financial goals. She compares credit scores to adult report cards, ranging from 350 to 850, reflecting creditworthiness. Responsible credit use, keeping balances under control, making payments on time, and managing inquiries are essential practices for demonstrating creditworthiness.

Rhonda emphasizes the significance of credit monitoring and explains the difference between FICO and Vantage credit scores. Monitoring credit helps detect unauthorized accounts due to identity theft, and Rhonda provides guidance on reporting and protecting against identity theft.

Rhonda illustrates the substantial difference in interest rates for someone with a 500 credit score compared to someone with a 750-800 credit score when applying for loans, such as car loans and home loans. Rhonda offers actionable steps to improve credit, including maintaining low credit card balances, making timely payments, avoiding unnecessary credit inquiries, and becoming an authorized user on an account with excellent payment history.

Rhonda's expertise sheds light on the crucial role of credit in financial stability and the steps individuals can take to manage their credit effectively. 

To learn more about Rhonda and get a free credit review, visit her website at https://kupaaconsulting.com/. 

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Host: Welcome, everyone, to the Budget Divas show. I'm thrilled to have Rhonda Alexander Monkres joining us today. Thank you so much for being here, Rhonda. We're going to delve into the topic of credit, a subject that many might shy away from, especially if their credit isn't in the best shape. But it's incredibly important. I'm excited to hear your tips on maintaining, establishing, and even improving credit.

Rhonda: Thank you, Jen, for having me on the podcast. I'm excited to be here. I'm Rhonda Alexander Monkres, the credit coach and owner of Kūpa'a Consulting Services. I'm based in Maui, and my mission is to help Hawai'i residents throughout the state improve their credit scores and achieve their financial goals.

Host: It's great to have you here, Rhonda. Before we dive into the topic, could you tell us a bit more about yourself and your background?

Rhonda: Absolutely. I'm originally from O'ahu and have lived in Hawaii all my life. I started Kūpa'a Consulting Services about a year ago to address Hawaii's housing crisis. I wanted to be a solution for residents looking to get credit ready for homeownership.

Host: Fantastic. It's clear you're passionate about helping the community. Now, let's get back to basics. What does having a credit score really mean?

Rhonda: Think of your credit score as your adult report card. It's a numerical value that ranges from 350 to 850. Just like grades in school, your credit score reflects your creditworthiness. This score influences your ability to access borrowed money from lenders like banks and credit unions.

Host: That's a great analogy. How can people use credit responsibly?

Rhonda: Responsible credit use involves showing you're a trustworthy borrower. To do this, keep your credit card balances under control, ideally under 30% of your limit. Also, ensure you make all payments on time and manage your inquiries carefully. Remember, lenders want to see you're responsible and can pay back borrowed money.

Host: Absolutely, responsible credit use is crucial. Now, let's address a common practice – opening multiple 0% interest credit cards and constantly transferring balances. What are your thoughts on this?

Rhonda: I believe in paying off credit cards and living within your means. Continually transferring balances can become a cycle of debt. It's better to establish good credit habits and focus on paying off balances consistently to maintain a strong credit profile.

Host: Wise advice, Rhonda. Now, let's discuss credit monitoring. What's the difference between credit scores from credit card companies and those from agencies like Credit Karma?

Rhonda: There are two main types of credit scores: FICO and Vantage. FICO is commonly used by mortgage lenders and auto dealerships, while Vantage is used for most other purposes. Credit Karma and similar services provide Vantage scores. Checking your credit regularly helps identify errors, track changes, and protect against identity theft.

Host: That's valuable information. Identity theft is a significant concern. How can monitoring credit help prevent it?

Rhonda: Monitoring credit is essential for spotting unauthorized accounts that indicate identity theft. Timely detection helps prevent further damage. Reporting identity theft involves getting a police report and notifying credit bureaus. Placing fraud alerts and monitoring can offer added protection against identity theft.

Host: Excellent advice. Now, let's talk about the impact of credit scores on interest rates. What's the difference between someone with a 500 credit score versus a 750-800 credit score when applying for a mortgage?

Rhonda: The difference in interest rates due to credit scores is substantial. For instance, someone with a 599 score could pay $10,000 more in interest for a car loan and up to $200,000 more in interest for a $250,000 home loan compared to someone with a 730 score. Maintaining a good credit score can save you a significant amount over time.

Host: That's a powerful illustration of the impact of credit scores. Now, for those looking to improve their credit, what are some actionable steps they can take?

Rhonda: Absolutely, improving credit is possible. First, keep your credit card balances under 30% and ideally around 10% of the limit. Pay all bills on time, as payment history is crucial. Avoid unnecessary credit inquiries. To improve credit quickly, consider becoming an authorized user on an account with excellent payment history. Finally, establish good payment behavior with a secured credit card and an installment loan.

Host: Those are practical steps for anyone looking to boost their credit score. Rhonda, thank you so much for sharing your insights and expertise today. For those interested in learning more or connecting with you, where can they find you?

Rhonda: You can visit my website, kupaakonsulting.com, and there's a "Get a Free Credit Review" button to book an appointment. I'm also active on Instagram at kupaakonsulting and have a Facebook group called "Hawaii Renters to Homeowners" for those looking to become homeowners.

Host: Perfect. Thank you once again, Rhonda, for being on the show and sharing your valuable knowledge about credit.

Rhonda: Thank you, Jen, for having me. It was a pleasure discussing credit and helping listeners on their financial journey.

Host: And to all our listeners, thank you for joining us on this episode of the Budget Divas show. Remember, managing your credit responsibly is a key step toward financial freedom.