How do I repair my bad credit?

Ralph Estep Jr.:
00:00

Now, before we dive in today, let me ask you this. Have you ever felt like a bad credit score was holding you back, like a weight around your ankles keeping you from reaching your full financial potential? Well, today we're going to break free from those chains. We're talking all about repairing bad credit. We're going to take some concrete steps towards a brighter financial future and, most importantly, doing it all while keeping our faith front and center.

Ralph Estep Jr.:
00:31

Hey everyone, welcome back to the Ask Ralph show. It's Motivational Monday, and you know what that means. We're tackling the challenge head-on with faith as our guide to help you achieve financial peace and, more importantly, financial freedom. Now yesterday we had a powerful conversation about biblical tithing and how that act of faith can unlock blessings in all areas of your lives. Remember, it's not about the amount but the heart behind your giving. You can check that out at our website, AskRalphPodcast.com.

Ralph Estep Jr.:
01:06

We'll speak from our hearts. We received a heartfelt message from a listener. Her name is Faith, and she wrote this:

Ralph Estep Jr.:
01:12

Dear Ralph, I made some financial mistakes in the past, and now my credit score is really hurting. I feel stuck. It's affecting everything, from getting a loan to even renting an apartment. I'm trying to rebuild my life, but this bad credit seems like a constant setback. Ralph, what can I do to fix it? And how long is it realistically going to take? I'm also worried about falling prey to scams. Any advice would be a blessing. Thank you, Faith.

Ralph Estep Jr.:
01:41

You know, Faith's story is more common than you might think. So many people are struggling with bad credit, feeling overwhelmed and unsure of where to turn. But let me tell you, there is hope. There is a path forward, and it starts right here, right now.

Ralph Estep Jr.:
01:59

Today's topic is close to my heart because I've been there. Just like Faith, I've seen the weight of bad credit firsthand. But I've also experienced the incredible freedom that comes from rebuilding. And let me tell you, that journey is possible for each and every one of us.

Ralph Estep Jr.:
02:22

Now, before we get into practical steps, Faith, let's turn to scripture for guidance. Proverbs 22:7 reminds us, "The rich rule over the poor, and the borrower is slave to the lender." Now, this verse isn't condemning borrowing, but it highlights the importance of wise financial stewardship and avoiding unnecessary debt that can lead to a place of burden. So, Faith, let's talk about repairing your credit. This is not about quick fixes or magic tricks. This takes time, dedication, and a healthy dose of faith, no pun intended there, Faith.

Ralph Estep Jr.:
03:00

So, what are some concrete steps you can take starting today, Faith? Well, let's start with step one: know where you stand. Faith, this is really the important part. Order a copy of your credit report from all three credit bureaus, Equifax, Experian, and TransUnion. Did you know you can get a free copy every 12 months from annualcreditreport.com? I'll put a link to that in the show notes. This is your financial report card, and it shows you where you've made mistakes and what needs improvement. I encourage you to also consider signing up for a credit monitoring service. I use one, as I discussed last week on the show, and it can really make a huge difference in managing and repairing your credit.

Ralph Estep Jr.:
03:42

So, step one: get your credit reports in front of you. Let's move on to step two, and that's to dispute errors. So, Faith, this is the time to carefully review your credit reports for inaccuracies. It's not uncommon to find errors, and even small ones can have a huge impact on your score. So, Faith, if you find an error, dispute it with the credit bureaus in writing and be sure to provide supporting documentation. It's important to keep a keen eye on your credit and know exactly where it stands at every moment. You have to be super proactive here and be ready to provide proof of inaccuracies. So, that's step number two.

Ralph Estep Jr.:
04:20

Number three: create a budget and stick to it. Now, Faith, this is crucial. You need to understand where your money's going so you can free up funds to pay down debt and start saving. Remember this: Philippians 4:13 tells us, "I can do all things through Christ who strengthens me." This is a time to lean on your faith as you create a budget that reflects your financial goals. I know you're saying, "There goes Ralph, harping on those budgets again," but it's the master plan for fixing and maintaining your credit. If you have a budget and, more importantly, if you stick to your budget, you should never find yourself unable to pay your bills, thus negatively impacting your credit.

Ralph Estep Jr.:
05:02

Let's move on to step number four. It's kind of a no-brainer: pay your bills on time. This is one of the most important factors in your credit score. Faith, I would set up reminders, use online bill pay, or even consider automatic payments to ensure you never miss a due date.

Ralph Estep Jr.:
05:21

There should never be a time when you don't pay your bills on time; it's just that simple. Let's move on to step number five, and that's to reduce your credit utilization. We talked about this last week as well. This refers to the amount of credit you're using compared to your total available credit. Now, ideally, you want to keep that credit utilization below 30%. Faith, paying down your balances is the best way to improve this ratio. If you find you're going over this 30%, you may want to see if you can increase your credit limit. But listen, put on the brakes for a second. Don't use that as an excuse for taking on more debt. You just don't want to do that.

Ralph Estep Jr.:
06:03

And finally, step number six: become an authorized user. So, Faith, if you've got a trusted friend or family member with good credit—again, I stress, with good credit—ask them to add you as an authorized user on their credit card account. This will give your credit score a boost, but make sure they have a good history of on-time payments. You don't want to get into another bad situation.

Ralph Estep Jr.:
06:25

Now, you might be wondering, as Faith said, "Ralph, how long will this take?" Well, unfortunately, there's no one-size-fits-all answer. It truly depends on the severity of your credit issues and how diligently you follow these steps. It could take several months to several years to see significant improvement. But here's the thing, Faith, don't get discouraged. Remember what Galatians 6:9 says: "Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up."

Ralph Estep Jr.:
06:55

And speaking of not giving up, let's talk about those credit repair scams Faith mentioned. These scams prey on people who are desperate for a quick fix. But trust me, there are no shortcuts in fixing your credit. So, here are some red flags to watch out for. Watch out for companies that promise to erase negative information from your credit report. Only inaccurate information can be removed, and you can dispute that yourself for free. There's no magic here, and anyone who claims they can get you a new identity or credit report number is just plain scamming you and lying to you.

Ralph Estep Jr.:
07:31

I saw the other day where a company actually promoted getting you an Employer Identification Number through the IRS, an EIN, to use for applying for credit. That's a huge red flag scam, so don't get into that one.

Ralph Estep Jr.:
07:46

Watch for companies that ask you to pay for their services upfront. This is actually illegal. Credit repair companies can only charge you after they have provided the promised services. If they want your money to start, run the other direction. And finally, watch out for companies that advise you to lie on your credit applications or create a new credit identity. We mentioned this a minute ago. This is not only unethical but it's also illegal and can have serious consequences. Having worked in the credit industry for many years, trust me, I've seen all kinds of scams, schemes, and ideas. The answer is really not that complicated. You have to fix your credit and honor it over time.

Ralph Estep Jr.:
08:28

Remember, Faith, rebuilding your credit takes time and effort. Don't fall for these scams. Instead, focus on the steps we discussed earlier. And if you're unsure about something, seek advice from a reputable financial counselor. You can actually reach out to me through AskRalphPodcast.com/store and schedule a consultation.

Ralph Estep Jr.:
08:47

So, as we wrap up today's episode, I want to leave you with this. Repairing your credit is not just about improving your financial situation. It's about restoring your integrity. It's about honoring God with your finances and stepping into the fullness of what He has for you. Remember this, Faith: you are not defined by your credit score. You're a child of God, worthy of love, worthy of forgiveness, and worthy of a bright future. So take these steps, stay the course, and watch as God does amazing things in your life.

Ralph Estep Jr.:
09:21

Don't forget to visit our website, AskRalphPodcast.com, and join our email list for more financial wisdom and resources. As a special thank you for being a loyal listener, you can receive a copy of my book absolutely free. It's "Mastering Your Finances," which normally sells for $10 on Amazon, but that's right, it's absolutely free when you join our email list.

Ralph Estep Jr.:
09:41

And if you're enjoying the Ask Ralph show, please take a moment to share it with your friends, family members, and others who will benefit from the show. Let's spread the message of faith and finance far and wide. And remember, if you've got a question you'd like answered on the show, just like Faith, send it our way. We love hearing from you, and I love answering your questions, just like the one today from Faith.

Ralph Estep Jr.:
10:01

Well, that's it for today's show. Join me tomorrow when we'll dive into the exciting world of Faith-Based Investing. We're going to explore some practical principles and tools to help you invest your money in alignment with your values. It's going to be a powerful conversation. You don't want to miss it.

Ralph Estep Jr.:
10:15

So, as I always say, until then, stay financially savvy. And God bless you and work on that credit report, Faith.