How Your Credit Score Saves You Money (& Tips to Improve it) with Michelle Lambright Black – EP 335

Listen on Your Favorite Podcast Player

Many people fear using their credit due to misconceptions surrounding this strong financial tool, not realizing the power of having a good credit score to save money. There’s no need to run off when you hear the word credit, because Michelle Lambright, founder of CreditWriter and a leading credit speaker and expert for more than two decades, is going to enlighten you on credit scores, the system, how to improve them, and their benefits for our finances.

Your credit score can almost sometimes be more influential over your auto insurance premium than your driving record.

Sponsors:

  • Ampersands. Today is National Ampersand Day and while we couldn’t find any food deals for the holiday, we did find some for next week and we’ll send you all the news you can use to get free food every Monday in The Friendletter along with money-saving tips and deals on Wed and Fri. If you’re not on the list yet head to frugalfriendspodcast.com/friendletter to get freebies & more.

Michelle Black is the founder of CreditWriter.com, a website that helps busy women (especially moms) learn how to take control of their credit and their money. She’s a leading credit expert, speaker, and personal finance writer with over two decades of experience in the financial industry. Michelle has been published and quoted thousands of times by outlets such as Forbes, USA Today, Reader’s Digest, Parents, Experian, FICO, Buy Side from The Wall Street Journal, BusinessInsider, Bankrate, and more.

Demystifying All Things Credit Score

If you find yourself feeling overwhelmed when trying to learn about credit, rest assured that most people find the topic daunting. Michelle wants you to picture your credit score like a grade you would get in school. Credit scoring systems assist lenders in seeing your credit report and evaluating your risk level to ensure that you will be able to repay the loan they can possibly lend. If you’re a high-risk borrower, they might deny you or approve you, but they will charge you a higher interest rate to make up for the risk.

It might surprise you when you find different scores from every credit bureau, and believe it or not, you actually have hundreds of different credit scores. There are a couple of reasons; it could be because you have three different credit reports from Equifax, TransUnion, and Experian—all of them have slightly different information about your credit. Or it could be because of the different scoring system software they use to create these reports. It’s just good to remember to focus on your credit report in order to have more control over what appears on it.

A Good Credit Score Saves You Money

There is more power in a good credit score than most people realize. The FICO Loan Savings Calculator would be a great tool to estimate your payments on mortgages and auto loans based on your credit score. Recently, the National Association of Realtors said that a medium home price right now (June of 2023) is around $410,000. Let’s say you have a 625 credit score. You will get an estimated 8.338% APR, which is going to put your monthly mortgage payment at around $3,160 (assuming you never sell the home). As compared to having a higher score, such as 760, you will get a much lower APR of 6.749%, which drops your payment to $2,659 a month. It can also greatly save you money on your car payment. In most states, your car payment is also dependent on your credit score to some degree.

Keeping It In Check

Michelle recommends checking your credit once or twice a year; at best, start where you’re comfortable. You can get free copies of your credit reports (Equifax, TransUnion, and Experian) at annualcreditreport.com, but those do not include a free copy of your credit score. However, you can check with Chase and AmEx to see if they offer free credit score copies. Michelle would usually look for new credit inquiries when she checked her credit report, as well as her other accounts, late payments, and anything negative recorded. Look for errors and dispute them to have them removed so you can get your credit score back.

Improving Your Credit Score

Get copies of all three of your credit reports, then go through each one of them thoroughly to check for errors and inaccurate information. Dispute it with an appropriate credit bureau—you can dispute more than once. Take a look at your credit card balances, as they’re going to have a positive impact on your credit score and budget. You can also try getting added as an authorized user on a friend’s or family member’s credit card that has a good standing with their credit score, as this could potentially boost your own score drastically.

For those who are faced with a bad credit score or do not have the resources around them, Experian Boost is free. Add bills to your Experian credit report, such as streaming services, rent, and phone bills. Research before considering it, as they’re not going to add all of your bills to all credit bureaus. Also, you can make use of credit-building loans like Self and Credit Strong to add a positive trade line to the bureaus and help build savings.

What was the first way you started to build credit?

  • Michelle: When credit companies used to have table setups on college campuses, Michelle was one of those who grabbed the chance to get a credit card in exchange for a freebie.
  • Jill: Jill got her first credit card from table setups in her college years, but was enticed by the beautiful starry night art by Van Gough printed on the card. Although she remembers being scared to use the card,
  • Jen: While Jen didn’t get her first credit card inside her campus, there was a Chase branch outside, and she found the black card they were offering cool. It had a $500 limit, which she promptly maxed out and kept—she doesn’t use it.

Bill of The Week

Thank you Michelle for sharing your bill about Billy, your 7th grade English teacher who helped you become the writer you are today!

Thanks so Much for Listening!

Thanks so much for listening. We love love love reading your kind reviews and we especially loved this one:

Relatable, informative, well-edited

It's real talk about all the finance and frugality trends that cycle through our culture. I love the balanced conversation and the open-minded support of everyone wherever they are in their financial journey. These podcast episodes have a few different formats. Some are interviews, others are views of articles on a certain topic.

I enjoy them all, as they are well-edited and hosted by two people with professional exchanges and voices. No useless banter, just fun, informative conversation.

Thanks for listening. If you enjoyed this show, please take a minute to leave a rating and review, it helps potential new listeners know what our show is all about!

And don’t forget to share your favorite quote from the episode by using the hashtag #FrugalFriendsNote. 

More To Explore

Free Cold Beverages

Happy Monday from Misti, Friends! Despite the record-breaking temps… everywhere. We’ve got some even hotter news (drum roll)… The Frugal Friends’ Book Buy What You

Read More »