Improve Your Credit Score

Did you know that improving your credit score by just a few points could save you hundreds of dollars a year? Hi, I'm Rob West.

It's true. Your credit score tells lenders three things, whether to lend to you, how much to lend to you, and at what interest rate. I'll talk about how you can improve your score and much more today with Neil E. Simon. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial journey. Well, our guest today is Neil E. Simon, a certified credit counselor with Christian Credit Counselors and underwriter of MoneyWise.

And there's not much about credit and credit scores that she doesn't know. Neil E., delighted to have you back on the program. Thank you so much for having me on the show.

It's a pleasure to be here. Well, Neil E., I've already mentioned what a credit score tells lenders, but let's back up a bit. Some listeners may not be aware of what actually determines an individual score. So I'd love for you to begin by breaking that down.

Sure. So your credit score is made up of five factors. Payment history, which is 35 percent of your score. Credit utilization is 30 percent. Length of credit history is 15. New credit, 10 percent. And types of credit is 10 percent as well. There's two major factors, though, and the major factors being payment history and credit utilization. And the reason for that is those two factors make up 65 percent of your credit score.

So what does it mean? Payment history. So it means how long have you had an account open and have you been on time? Keep in mind one late payment, which means you haven't made your minimum payment and it's 30 days past due from the due date, will take on average six on time monthly payments in order to outweigh that one negative mark. So be careful. You can quickly destroy your credit score.

That's taken you a long time to build back up. And then credit utilization means how much credit limit has been extended to you and how much you actually using. When you're using credit cards, the goal is really to stay below 30 percent of the credit limit if you want to maximize your score.

The reason for that is that once you go over 30 percent, you begin to negatively impact your score. And then it's a varying degree up until utilizing 100 percent of your credit line. And that's because once you pass that threshold, creditors are viewing you as becoming overextended. And the more overextended you are, the less credit worthy you become.

You know, it's interesting. A lot of people call in to Christian credit counselors and are interested in our debt management program. And I hear comments that they don't understand why their credit scores in the six hundreds that they're never been late. They continue to pay on time and they're making their minimum payments. The reason for that is because they have high utilization. So the bottom line is, if you want to maximize your score, you want to have accounts open for a long period of time. So you show the payment with low usage. Yeah, that's really helpful.

Let's unpack those just a bit further. Starting with payment history, you made a key point, and that is you're considered late from a credit reporting standpoint if you're beyond 30 days late. So you missed that first payment. You're typically going to get a late fee, but that's not being reported to the credit report until you're beyond 30 days late, correct? Yes, that's correct.

OK, a lot of folks don't realize that now we don't want to get into that trap. I don't want to be paying late at all, even just less than 30 days, because you are going to have that fee and that's just not a good habit to be in, but it is important to draw that distinction. And then in terms of credit utilization, of course, we're talking about revolving accounts, which would be credit cards, because when you take out a car loan or a mortgage, you're going to start with owing 100% of the loan. So this is a revolving account where there's a line extended to you, correct? Yes, that's correct.

Thank you for clarifying that. OK, so the key is you want to be an on-time payer every month. That's 35% of your score, as Nealey has explained, and you want to keep your credit utilization low.

So whatever is extended to you, we'd love for you to keep that at zero, but certainly less than 30%. And Nealey, when we come back after the break, we're going to continue to unpack this a bit and talk about what your credit score affects. These days, it's more than just your ability to get a loan.

There's other issues there, and what you can do if you find you don't have a great score. We're joined today by certified credit counselor Nealey Simon. She's with Christian Credit Counselors, an underwriter of MoneyWise, and we'll be back after this break to talk much more about credit scores. This is MoneyWise Live, biblical wisdom for your financial journey.

Stay with us. Welcome back to MoneyWise Live. Joining me today, certified credit counselor Nealey Simon. She's with Christian Credit Counselors, and if you have credit card debt, this is my preferred solution for you to get out of debt quickly, paying on average 80% less because of lower interest rates. It's a far more effective solution, but today we're talking about credit scores.

What are they? How important are they to you, and what can you do to improve it? Just before the break, Nealey, you were explaining the breakdown of what makes up our credit score, our payment history, our credit utilization, the length of credit history, any new credit we have, and the various types of credit, but let's drill down a bit into the importance of having a good credit score. What do you tell your clients at Christian Credit Counselors? The reality is that you're going to save a significant amount of money over your lifetime if you have a good credit score, and you're going to have more opportunities. It's interesting today too, with a lot of listeners out there maybe looking for employment, a lot of employers are now running credit scores to get an idea of how responsible you've been in your past. Let's talk about that because your credit score affects so much more. You mentioned one of those examples, which is your employer. What else?

Yeah, so think about it. Having a credit score enables you to do a lot of things. You can rent an apartment. You don't have to put a deposit down for your utilities. It makes you eligible for low-interest credit cards, lower car notes. You can buy a home. You basically have a lot more flexibility about taking out a loan or even starting a business.

I think the list really goes on. Because of having more opportunities, you're also going to have more leverage to build and grow your wealth with a good credit score. Yeah, that's really important. All right, so we've established the importance of having a good credit score, but what do you do if your score isn't that great?

You're wanting to try to get it up. What ideas do you have for us? So there's several things you can do. One is become an authorized user. Keep in mind, as an authorized user, you are not financially responsible for the debt, but you do inherit the payment history, good or bad. So you need to be careful, but it is one way of establishing more credit history. Another one is getting a secured credit card. So what that is, is you go into your bank and the money that you put down is the credit limit that is given to you on the secured card. But you need to be careful because a secured card is going to report the same way a regular credit card is going to report.

So those five factors do play a role. So make sure you want long payment history and keep it below 30% and try and actually pay it off every month if you can. The other thing is that there are some credit card companies out there that don't have as strict rules in terms of getting their cards, but they do have higher interests.

So you need to be careful. Two of those companies being Credit One and First Premier. The other thing that's important is pay your bills on time.

I can't stress that enough. We spoke earlier about the impact of just one late payment. So do everything you can to pay your bills on time. Another thing you'll want to do is run all three credit reports at least once a year. Many times there's discrepancies on your credit report or errors and you have to understand that nothing happens quickly on a credit report.

So if you're looking to buy a home or a car and you have something on there that you didn't even realize, you're not going to be able to get it removed quickly. So being proactive and checking those reports for any errors each year is going to be important. Now a good resource to do that is annualcreditreport.com.

You can run all three reports for free at that website. Okay. Now you mentioned disputing accounts that perhaps are inaccurate and this does happen from time to time. You pull a report, you see something on there, says you owe a certain amount or it's past due and it's not true. What do you do then? Right. So it's pretty easy to dispute with the credit bureaus.

You go straight to their website and it's on their homepage and there's a few different steps that are involved but it's pretty straightforward. The important things being is that you need to be proactive and address them as soon as you can. Okay. Very good. And then every now and then you'll see a collection account.

Maybe it's accurate. You did have an account that went into collection. How should folks approach that not only to satisfy their obligation but to handle it so it's treated as positively as it can be from their credit reporting standpoint?

What I see is two different types of collection. A lot of times there's medical debt collection and the collection accounts. I just want to share with you that medical debt weighs the least amount on your credit score. It's important to pay back but it weighs the least. So if you're trying to improve your credit score, you want to tackle those collection accounts first. A lot of times collection accounts, you can set up a payment plan with them. Something to keep in mind, depending on the amount, most creditors will not extend the life of a debt over a five-year repayment plan. So it's not legal advice but it's just a general rule of thumb. If you take the debt that you owe, divide it by 60 payments which is five years, that's going to give you a baseline in terms of the least amount of money a creditor will accept for a monthly payment plan.

All right, very good. And then finally, how do you get credit for rent and utility payments which are typically not reported to the bureaus? Yeah, so this is kind of a new thing that the credit bureaus are doing. So there's now ways where you can do your rent, your utilities and phone bill and actually have them report on your credit report. An example of that is Experian Boost. So if you listeners out there don't have much credit trying to establish it, this is another way of you getting a payment history that's going to help you improve your score.

All right. Now, as I mentioned a moment ago, Nealy, my preferred way for folks struggling with credit card debt to get out of it once and for all is debt management. So I want you to talk about how credit counseling can help these folks. So first of all, I just want to share that Christian Credit Counselors does not offer a settlement program. Instead, what we do is we help set up a debt management program.

So what is that? A debt management program benefits people through the pre-negotiated interest rates, terms and conditions we have with creditors. So we lower the payments, we lower the interest rates. You're still making on-time monthly payments to the creditors. The accounts just get closed and the interest rates will range in between 2% to 12% APR and they're going to vary per creditor.

All right. And how are you able to have such a big impact on clients' credit situation? What are the key factors? I think what's important is that there's a lot of people going through hardships right now because of the pandemic, because of various different reasons. A lot of times people are stuck in this cycle of making payments with very little progress.

So it's very frustrating. And if you're making very little progress, it shares with us that you don't have much disposable income, right? And when we're living paycheck to paycheck, we're truly just on the verge of a crisis if something happens.

And we're leaning on credit card debt in order to be our emergency savings. That's not where God wants us to be. He doesn't want us to be in that bondage, have that fear and stress and strain.

He really wants us to be in a place where we have peace, where we're able to be generous and where we can really focus on the gifts that he's given us so that we can impact others. Very well said, Nealy. Well, we're so grateful for our partnership with Christian Credit Counselors. Thanks for stopping by today. It's great to be on the show.

Have a great day. Nealy Simon with Christian Credit Counselors has been our guest today. The website, ChristianCreditCounselors.org. This is the program where the 2,300 verses on money and possessions found in God's Word intersect with today's financial decisions and choices. The number to get in on the conversation, 1-800-525-7000, 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial journey. We'll be right back. Thanks for tuning in to MoneyWise Live.

I'm Rob West, your host. This is biblical wisdom for your financial decisions. We began today by talking with our friend, Nealy Simon, about credit scores and paying down debt. If you have a question related to that topic, we'd love to hear from you, but we're also going to open up the calls to any financial topic as well. We've got some lines open. The number to call is 800-525-7000.

That's 800-525-7000. We'd love to hear from you. Whatever's on your mind today, financially speaking, we'll tackle it. Let's dive into our phone calls today.

We're going to begin in Spokane, Washington. Ann, thank you for calling. How can I help you? Yeah, I've got a credit score of 671, and I have two credit cards. One I pay off every month. The other one's got a $400 balance with no interest.

I had to buy a refrigerator. But it keeps telling me to get a new credit card will up my grade. I don't quite understand how another credit card can help me get a better credit rating.

Yeah, it won't necessarily. So here's the idea. The only way you can improve your situation would be based on this idea that we were discussing earlier, which is credit utilization. Basically, your credit utilization is the amount of revolving credit you have, which is what credit card debt is. It's called revolving credit. The amount you're using divided by the total amount you have available. So you divide the amount that is outstanding across all your cards divided by the total limit on each of the cards, and that's going to give you a percentage in the aggregate. And the models for the credit scores want that number to be below 30%. If it's below 10% of the total limit, that's even better.

So the only thing that getting a new credit card would do is if you were carrying balances that were pushing your total credit utilization across all of the limit that you have available on those two cards that you mentioned you have active, if the balance you were carrying pushed you above 30%, well, adding a new card with a zero balance is going to make that total amount you owe less, a lower total percentage of the new, larger available credit that you have by adding that third card. But if all you're carrying is $400 and you're working to pay that down, you're really not going to benefit from another credit card. There is a popular misconception that carrying debt month to month, having a balance is going to help you in some way, and that's just not true. You want to keep those balances as low as possible.

Now, showing yourself as an on-time pair every month is a good thing in the scoring model. So the key would be to have a budgeted item that hits that card every month, or several of them, and then pay it off in full. But simply adding an additional credit card is not going to benefit you. Now, part of the model also weighs in on what types of credit you have. So you're rewarded for having a revolving account like a credit card and a mortgage and a car loan. As you add these other types of credit and manage them responsibly, i.e. pay them on time, keep the balances low or declining, that's going to benefit you over time.

So having a number of types of accounts open is a good thing, but just adding a third card for the sake of doing it, if you're not carrying balances up higher than 30% utilization, there's really no benefit to you. I know I threw a lot at you. Tell me if you have any questions. Yeah, that really makes sense to me. Yeah, I understand that.

Good. Well, I think the key is just continue to pay those balances down as quickly as you can. Try to pay them off in full if you can, and I know you're working on that, and your credit score will take care of itself. We appreciate your call today very much.

Murfreesboro, Tennessee. Kay, I understand you have a credit score question as well. Hi, yes, I believe you provided some clarity with Ann, but just for more confirmation, my question was, you mentioned earlier about credit utilization and about, of course, under 30%, but you said try to keep it at zero. So I paid off my credit card last month, and then today I was like, oh, I need to buy something with my credit card so I can help my score.

Is that a good thing or a bad thing? Because I have other accounts, like my auto loan. Is it best for me to at least use that card at least once or twice a month? Because I honestly don't have to use it. I just thought I should.

Yeah, yeah. Well, there's a couple of reasons why you'd want to use a credit card. Number one is for convenience. As long as you're using them for cards for budgeted items, meaning you've planned this expense, you're not using it to fund a purchase that's outside of your budget that you really can't afford, and then you're paying it off, that's in my view a good use of a credit card. Secondly, it does help your score. Having that transaction hit the account, which then involves you being able to make an on-time payment is a good thing because the most recent information, the most recent activity is going to impact you the most in terms of driving your credit score.

So I would agree. Having that transaction every month, whether it's one small recurring transaction or a number of your bills that you have on auto pay, whatever it might be, as long as you're paying it off, that is actually going to contribute to a good score. Related to the credit utilization, you'd only have to think about that is if your charges for the month were pushing up above 30% of your limit. Now, here's one thing that a lot of people don't understand and that is that the credit card company reports your balance to the bureau at the end of the cycle and typically you make your payment after the end of the cycle. So if you had a $10,000 limit and your monthly charges were $3,500 and now that $3,500 is being reported to the bureau and then you come in the next week and pay it down to zero, what's being reported is $3,500. So if you were in a situation where your monthly charges were above 30% of your limit, I'd probably pay that a few days before the end of the cycle and pay it off so that the amount that was reported was less than 30%. If you're concerned about your credit score, that would help to make sure that you have the best score possible. Does that make sense to you?

It does and that was going to be a follow-up question. So my bill is due on the 1st of every month but when they pull it, it always says something around the 8th or the 9th. So when I did have a balance, I will pay by the 1st or on the 1st, then I will pay again around the 8th. Yeah, and you can certainly do that and that's going to help in terms of the amount that's being reported. But here's the thing, I don't want to make it overly complicated.

If you're just charging a few things every month and you know we're not talking a balance, even though you're paying it off, the balance reported is not anywhere near 30% of the limit, then it's probably not even worth it to go through that extra hassle because it's really not impacting you negatively. But what you're doing is the right thing. You keep it up Kay. We'll be right back on MoneyWise Live.

Stay with us. Thanks for tuning in to MoneyWise Live. I'm Rob West, your host. 800-525-7000.

We've got one line open. Perhaps it's for you. We've been talking about credit, credit scores and paying down debt today. Before we head back to the phones with a number of questions on this topic, let me remind you one of the very best ways to make sure you get out of debt and stay out of debt is living below your means. Now I know that sounds simple.

It's often more difficult to do than it sounds. The key to that is having a spending plan and the MoneyWise app can help with that. You can connect to your institutions, download your transactions and use the tried and true envelope system in a modern digital format to stay on top of your spending throughout the month. You and your spouse can share one account, have access to your envelope, balances in real time at any time and it's actually flexible to fit your personality. You can find it in your app store.

Wherever you download apps, just search for MoneyWise Biblical Finance. All right, let's head back to the phones today. Waiting patiently is Sofia in Las Cruces, New Mexico.

Sofia, go right ahead. Hello, good afternoon. Thank you for your program. I've been listening since I've been doing my home health.

You've been very helpful. My question is, I'm blessed to have a good paying job, but it just so happened that there are some emergencies back home in the Philippines, so I'm sharing my blessings through money. Here in the U.S. I have $2,500. I owe a credit card, you know, $2,500. Now my question is, should I just pay it with my savings or just wait until I get paid? I don't normally have a zero balance with my checking, but it just so happens right now in this case, so that's my question. It's just bugging me to see those numbers.

Yes. Well, I totally understand that. So you said you have $2,500 roughly in credit card debt.

You don't have much in checking while you're waiting for income. What do you have in savings today? It's a very good number, around 16. Around 16,000? Yes, sir. Okay, that's great. And what are the total of your monthly expenses, roughly?

All in all, all in. I would say it must be $2,000, $2,300. All right, let's say it's $2,500. So three months' worth of expenses would be $1,700. Six months' expenses would be $15,000.

And did I say $7,500 would be three months, $15,000 would be six months. So I think given that and given the interest you're likely paying on that $2,500, Sophia, I would say if it were me, I'd just go in and wipe that out. Just go ahead and pay that credit card debt off in full. That's going to bring your savings down from $16,000 down to $13,500, which is still going to give you about five months' worth of expenses in the bank as an emergency reserve if you needed it. And you shouldn't even need that because you've got income coming in. And then take that amount that you would have been sending to the credit card each month and replenish your savings every month moving forward until you get it back up to where you want it. And then perhaps you take that and start investing it for the long term. But I don't think there's any reason to hang on to that debt given the savings that you have. Yes, sir.

And I already have my Roth IRA, 401k, all of that. It's just bugging me to see that number. It would bug me too. And that's why I think you have to just knock it out once and for all. I think that's a good plan. Hey, Sophia, thank you for your kind remarks and for listening. We appreciate it. God bless you.

Zealand, Michigan, WGNB. Hi, Beth. How can I help you? Hi, Rob.

Thanks so much for taking my call. I have a question about a credit report score that is blank. What would cause when someone would have a credit report run for line items to show of, say, a mortgage that's being paid but no score returned? Well, keep in mind, Beth, the credit score, excuse me, the credit report does not have a credit score on it.

Those are run separately. So if you go to annualcreditreport.com or you go to directly to one of the three bureaus, Experian, TransUnion and Equifax, generally, when you pull your credit report, there is not a score on it. You have to go seek that score directly. And when you do, the score is generated based on the information in the report that's being used to generate the score, whether it's any one of those three. And depending on which scoring model you're using, the Vantage score or FICO score, they use different bureaus and they have different algorithms. So I use, you know, you do have a score, whoever you're talking about has a score. The question is, you know, were you pulling it?

And it sounds like you were pulling the report. And typically, those don't include the score. So the quickest and way to get that score is to go to one of the free services. I like creditkarma.com. They don't charge you to get your score and doesn't require a credit card. Again, it's creditkarma.com. The other approach would be a lot of times if you have a credit card, a lot of the credit card companies now are offering free credit scores and most banks now are offering free credit scores to their customers. So you could go that route as well.

But it's not surprising that there was not a score listed on the report itself. Okay, thank you. Can I ask one more follow up question? Sure, yeah, go ahead.

I am asking for somebody else, so I'm not 100% sure of the detail. But if going to creditkarma.com, you would go do that process to get a score, would there ever be a scenario where you wouldn't see one after you did that? No, no. I mean, most adults, just about everybody is going to have a score now. There may be a lack of information out there, but generally it's going to return just a very low score if there's just not a lot of credit history.

But if you've got a social security number and a credit report, you've got a credit score. Okay, great. Thank you.

We'll give that a try. Awesome. Thank you for your call. I appreciate it.

Hollywood, Florida. Hi, Joseph. How can I help you? Hello. Hey there. Go right ahead. Yes, sir. Hey, how are you? Very good.

I just had a question. I wanted to consolidate my credit cards, but my concern is I don't want to affect my credit score because I had filed bankruptcy over like 15 years ago. And I don't know what to do to get rid of the debt, but not affect my score. My score right now is like 790.

Yeah. Well, I don't recommend consolidating. So my typical approach, unless you're going to just snowball in and pay it off yourself, what I would prefer to see you do is what's called debt management, where you'd go through a credit counseling agency. The reason is you're going to get those interest rates down and be able to pay it off a lot faster with less interest just because of the reduction in interest rate and a level payment that doesn't come down as the balance comes down. The fact that you're in debt management, Joseph, does not factor into the credit scoring algorithm. Now, it will be noted on your report that the accounts were closed because of debt management. And although that won't affect your credit score, if a lender, when you're seeking credit, pulls your credit and sees that, they could choose to use that information however they want.

But nine times out of 10, they're just going to use the score itself. So that would be my approach. My friends at christiancreditcounselors.org could help with that debt management program.

Check them out online and they'll tell you all the details. We appreciate your call. MoneyWise Live, we'll be back after this.

Stay with us. Thanks for joining us today on MoneyWise Live, biblical wisdom for your financial decisions. We started out today talking about credit, credit scores and debt reduction, and well, we haven't looked back. Lots of questions out there today. So let's head right back to the phones. Tampa, Florida is where Henry's located. Henry, how can I help you? Yeah.

Hello. Thank you for taking my call. We have high revolving debt, over $100K. Also we have a minimum emergency fund, which we keep going back to and failing, but been struggling to maintain that. I have equity in the home at $100K approximately that we could possibly tap into. But in addition to that, we have IRS and some medical obligations in the process of making a payment plan for interested in doing the Christian debt counseling thing.

We've definitely talked to the other ones, which, you know, they tell you not to pay your bills. I think that's not ethical. I just don't want to go that route. Sure.

Yeah. I'm not surprised to hear that that was recommended to you, Henry, although I concur with you, that's not the approach to go. And what they're trying to do there is to get these accounts in a past due or collection status with the hope that then you can come in and try to negotiate a lower payback, lower total balance payback, but also a lower monthly payment. You know, that's just not a good way to go, as you said, not to honor your debts, but also just the collateral damage that will come.

And with these kinds of balances you're talking about, you could likely see a judgment of some kind. I would also not look to your home equity, Henry. You know, what you've got is unsecured debt. I agree it's high. You've got you're paying a lot of interest, but the last thing we'd want to do is take unsecured debt and secure it to your home.

So if for some reason you're unable to make these payments instead of just getting a judgment against you, now you know, you get a foreclosure of your residence. And we certainly want to avoid that. I realize this can be overwhelming. Do you have good income?

Yes, though not consistent on contractor. Okay. What are the total minimum payments you're paying right now on the credit cards? They are around $20,000, probably around $2,000 easily. Yeah.

Okay. Because what you're going to see is typically it's going to be around, you know, the credit counseling program is going to use usually a 60-month minimum payment, so it'd be around $1,600, $1,700 a month. You're probably paying a little bit more than that. The benefit is with that consistent monthly payment, assuming you can fit it into the budget. And good news is it sounds like by and large you have to this point, with those much lower interest rates, at least we'll get these balances coming down. Obviously, we want to continue to work through the medical bill, you know, payback, payment plan and the IRS. Are you working with someone to help with an offer in compromise and try to get a payment plan with the IRS? We are in the process of that. We have to kind of correct some other stuff before we get to that point, but we have that in line.

All right. Well, I would start that conversation with Christian Credit Counselors. Again, you'll find them at christiancreditcounselors.org. These are wonderful folks. They've been doing this, you know, 20-plus years.

They're all believers. They'll work with you. It's a very reputable organization, not for profit. And I think this is going to be the best solution for you to get these paid down and off once and for all, without you converting it to something that's collateralized by your home. So, I'd stay on the track that you're on, but I'd give those folks a call and see what they can do for you, okay?

Okay. And if I could ask, in terms of somebody for the IRS portion of it, do you have any suggestions for people to maybe, you know, kind of do a second offer? Yeah, I would just make sure that you're connecting with a CPA that has experience, you know, arguing and negotiating with the IRS specifically in this area. A lot of times you'll find that an enrolled agent, EA, not all of them, but many of them have expertise in this area, but I'd want to make sure you have somebody who has a particular expertise. So, a couple of options. One is if you hang on the line, my producer, Amy Rios, will get your information and we'll be sure to have somebody follow up with you. You could also reach out to a certified kingdom advisor there in Tampa and ask for a referral to someone locally, but I can at least connect you with somebody who's done a bunch of this and really has a specialty in this area, okay?

That'd be awesome. Thank you very much. Very good. You hang on the line, we'll get your information and get that right out to you. Thanks for calling today. Davey Florida, hi Tammy, thanks for your patience today. How can I help you?

Oh, thank you. I was calling because I usually have to do that transfer to my credit card after I get a loan for financing a car because it's usually a lot less interest for me, but this time I don't have to. So, I found this car and it's a truck because I have a farm and I'm moving to Tampa area from Davey area. At any rate, this vehicle, I have the cash to pay for it, but they're forcing me to take their financing at 5.14% and I don't want to, but they won't give me the vehicle unless I finance it.

Where are you buying this from? From a Chrysler dealership. If they wouldn't let you buy a car in cash, I'd head for the door if it were me. Have you tried to ask for the sales manager or somebody in the finance department to plead your case? I've never heard, although they like financing because that's another way that they can make some money, I've never heard of a car dealer not wanting to move a car with somebody who's willing to buy in cash. That's what they told me. They wanted me to finance because they did lower the price, like $1,700 more, and I've been back and forth for like two weeks. And so, they did tell me that's the reason they wanted me to finance it because of the profit that they're losing. Well, I would tell them I want your very best cash price and then I would look at that and compare that and shop it around to other places where you could perhaps find a car a little bit better.

It's going to take some time and I realize you may be wanting to just get this checked off and move on, but just realize that you may end up paying more by doing that. So if it were me, and a lot of times when I'm buying a car, it'll take me two or three months to find the car. And the last car we bought as a family, I flew four states away to buy it and drove it home because that's where I got the best deal. So if it were me, I'd go back in there and say, I want your very best cash price.

And then I would go shop that around, Tammy, and look at a number of other places for that same, if that's the make and model that you want and year, then let's go shop that not just locally, but on the internet in other states and see where you can get the very best deal. But I wouldn't finance it if you're wanting to pay cash just so they can make some more money. I wouldn't do that. Okay. All right. Great. Thank you again for your time. You're the best.

All right. God bless you, Tammy. Thanks for calling.

Clearwater, Florida is where we're going to finish today. Carmen, thank you for calling. How can I help you? Yes, I have a debt of credit cards over $10,000. And I wanted to pay off some of the bank, credit card bank. I want you to pay it off and then close my account. Is that going to damage more of my credit?

Yeah. You know, when you close accounts, Carmen, you can see a decline in your credit. It's most often going to be because you're carrying balances on the other cards that are still open. And when this card that you're closing, the limit related to that card is no longer factored in, the amount that you owe on the other cards is a higher percentage of your new lower total limit, if that makes sense. So that that card is now out of the equation. But if you're paying all these cards off in full, and I'd want to confirm that, then closing one is not really going to have an effect. It may be for a month or two, but it'll come right back up.

So let me ask you, when you close this account that you're referring to, will you be carrying balances on the other remaining active cards? Oh, yeah. Okay. Yeah.

How much? Okay. I had credit cards with the balance of $3,000. This one that I wanted to close is like over $2,000.

Okay. So were you going to do a balance transfer or were you going to pay it off? I wanted to pay it off all my credit cards.

And I used it. I don't have the credit card because I cut it off. Because I've been, it's almost, I was leaving to my credit card because everything happened. All right. Do you have the money to pay these cards off? I'm going to have it, yeah.

Okay. Well, what I would say is if you're concerned about your credit score, you're going to want to make sure that you pay the cards off before you close that additional card that you're looking at. Because otherwise it will have a detrimental effect on your credit score because the total limit that you have will decline as that card comes out of the equation. And then the balances that you're carrying on the remaining cards will be a higher percentage of that credit limit. So your utilization will go up. That will cause your score, which you said is already in the 600s, to drop. So what I would do is probably hang on to that card and let's get a plan to pay these off either with the funds that you said are coming or by enrolling in a debt management program and getting on a monthly payment plan with lower interest rates so you can get these balances declining, okay?

And how I can do that? How I can get in and get a lower interest? Yeah, through credit counseling. So if you visit our friends at christiancreditcounselors.org, they'd be happy to set you up with this program. Basically they'll pray with you, they'll look over all of your balances, they'll look at your budget, help you develop that spending plan, make sure that you can afford the monthly payment, which is probably going to be the total balance across all the cards divided by 60. That's roughly what you're going to be paying each month. And through their relationship with the credit card companies, they'll be able to get you lower interest rates on all the cards, which will help you pay it off a lot quicker. So check that out at christiancreditcounselors.org. And Carmen, we appreciate your call today.

That's going to do it for us. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thank you to Hans on phones today, Amy, our producer, Dan Anderson, engineering. I want to say thank you to Jim Henry as well for providing research. We'll see you tomorrow. God bless you. Bye-bye.