Financial Empowerment – Building and Establishing Credit
(WBNG) — Credit can seem mysterious, especially if you don’t have any. So in this article, we interview Rodd Griffin, Senior Director of Consumer Education at Experian, to solve the mystery so you can start building and establishing your credit.
When learning about credit, Rodd Griffin says learning and building credit starts with asking for help.
“When you’re just starting out, it’s about asking people you know, like your parents. Go to a lender or credit union and ask them about borrowing. You can also visit Experian’s website to learn more,” Griffin said. He also says that once you get help, the next step is to ask yourself the following questions:
- What is credit?
- If I will borrow money? What does that mean? I think that’s the first thing you need to understand what credit is.
- If I am going to borrow, what are my responsibilities? What should I know?
- What is the interest rate? What is APR?
- What are my payments? What happens if I don’t make these payments?
For consumers who don’t have good and credit such as loans or credit cards, Griffin shares a free program from Experian that will help you establish credit if you pay your cell phone bills, utility bills or streaming service in time.
“We introduced Experian Boost. It lets you add your positive cellphone payments, utility payments, and streaming services like Netflix and Hulu to your credit report. You control it. It’s permission-based,” Griffin said. “You can tell us to stop if you choose not to include them anymore. We give you a credit report with a FICO score of 8 when you start the registration process so you can see where you are at, then we give away a free report and score when you’ve completed the process. It took us three or four years of research to verify that these types of payments are predictive of risk, just like a credit account.”
Griffin also says that when establishing credit, it’s important to always have a plan.
“If you’re going to use credit, make sure you have a plan because that means knowing how much you’re borrowing, why you’re borrowing it, when you’re going to pay it back, how you’re going to pay it back,” Griffin said. Also, more importantly, what will you not buy or delay until you have paid that debt, because using credit is always a trade-off; You use debt to make a purchase that you could not otherwise afford.
For additional free resources to learn more about credit, you can visit the Federal Trade Commission’s consumer advice website by clicking here.