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I don't know about you, but I never learned about credit in school.

There was no class to teach us about how to use it, build it, or leverage it to create opportunities.

Yet your credit score can determine whether you get that apartment, qualify for a business loan, or even land certain jobs.

It's become the financial gatekeeper we never signed up for.

Here's a thing.

Most of us stumble into credit backwards.

We get that first credit card in college.

You might miss a payment or two.

Too many students learn the hard way that a three digit number, that credit score, can close doors that we didn't even know existed.

But what if we flip the script?

What if instead of credit controlling us, we could master it?

What if we understood not just the mechanics, that's payment history, utilization, ratios, credit mix, but the strategies that turn good credit into financial freedom.

Consider this...

A seven year car loan now makes up about 20% of all new vehicle financing.

If you've shopped for a new car lately, you know why?

There's sticker shock.

I was shopping for a new car last month and every car I looked at, I couldn't believe where prices are compared to pre pandemic.

The average cost of a new car is $50,000.

So for many people, a seven year loan is the only way that they can afford the monthly payment.

But here's the catch.

That longer loan adds about $4,600 more in interest compared to a traditional five year loan.

So your credit score determines whether you pay 3%, 4%, 5% or up to 16% on that seven year loan.

And that difference can can be what would be manageable or something that's crushing.

So today on Inspired Money, we're unlocking the power of credit with four incredible experts who have helped thousands of people build and manage credit strategically.

From credit repair to fintech innovation, from consumer rights to financial journalism, they're here to share what actually works.

Whether you're starting from scratch, rebuilding after a setback, or optimizing an already strong profile, this episode will transform how you think about credit.

Because maintaining good credit is not about just getting approved.

It's about unlocking opportunities you haven't even imagined yet.

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Now let's bring in our expert panelists.

Our first guest is one of the most trusted voices in America when it comes to debt and credit, Howard Dvorkin.

He's a nationally recognized expert, two time author and chairman of debt.com.

He's shaped consumer protection laws, led national credit counseling groups and his insights have been featured everywhere from the New York Times to CNN and Fox News.

If you've ever wondered how to escape debt or master credit, Howard's the man to listen to.

Howard, welcome.

Thank you very much Andy.

Appreciate being asked to be here along with your astute other guests.

It's going to be great.

We're also joined by Anthony Davenport, the founder and CEO of Regal Credit Management.

Anthony is the go to expert for professional athletes, entertainers and high net worth individuals who want to build, protect and repair their credit.

He's a best selling author of "Your Score," he's a certified FICO credit expert and he's been featured in Forbes, USA Today and Oprah Magazine.

He knows the credit system inside and out and he's here to share what most people will never learn on their own.

Welcome Anthony.

Great to be here Andy.

Our third guest is a fintech innovator who's rewriting the rules of credit building.

Cullen Canazares is the co founder and CEO of Rental Karma, a platform that helps renters boost their credit simply by reporting rent payments to major bureaus.

A Stanford Business School alum and serial entrepreneur, Cullen has already helped more than 100,000 people improve their credit scores and move closer toward home ownership.

His mission is financial inclusion and the results speak for themselves.

Cullen, so great to have you.

Hi, Andy.

Thanks and hello to everybody else.

And rounding out our panel today, we're joined by Reyna Goble, an award winning journalist, speaker, and author of seven books, I think.

Is that right?

Seven?

Yep.

Including "Graduation Debt," a Washington Post book of the month.

Her work has been published in the Atlantic, Scientific American, Money, Reuters, and she's taught thousands of students and professionals about personal finance.

Reyna brings a unique perspective bridging finance, education and wellness to help people live better financially and beyond.

Reyna, welcome.

Happy to be here.

And one thing that I want to point out for people that may be a little scared of these topics is I'm going to talk about the really easy and minimal investment ways to improve your credit without hurting the rest of your lifestyle.

Great.

We hope to cover the full spectrum.

With this esteemed panel of experts.

We're going to have a thoughtful and informative conversation about credit and how we can learn to use it to our advantage.

So let's jump right in and go to segment one.

A credit score is determined by five key

factors: payment history (35%), credit utilization (30%), length of credit history (15%), new credit inquiries (10%), and credit mix (10%).

Payment history is the most influential as lenders assess reliability in repaying debt.

Credit utilization measures the percentage of available credit used with a recommended rate below 30% to avoid negative impact.

The length of credit history reflects account age, favoring long standing accounts.

New credit inquiries, particularly hard inquiries from loan applications, can temporarily lower scores, so spacing out applications is advisable.

A diverse credit mix of revolving credit and installment loans demonstrates responsible credit management.

Strategies for improvement include making on time payments, keeping balances low, maintaining old accounts, and applying for credit only when necessary.

Understanding these components helps individuals build strong credit profiles for financial opportunities.

Howard, I want to start with you.

How has the credit score formula evolved over the past 20 years and what trends concern you most today?

Well, the credit score formula, the FICO score, which is Fair Isaac Company developed this using math, frankly, and they turned around and built this algorithm that can score people because before probably 25 years ago, maybe even longer, it was done manually by a loan manager.

And basically it was not a scientific thing.

If you had a good credit history.

Oh, okay.

I know John.

He's.

He's a good guy.

He'll pay us back.

And, and what Fair Isaac came up with was a formula to take the personal thoughts out of it and basically have it quantitatively analyzed.

And that has really improved the chances of lenders ability to get repaid.

And then there's another large credit analysis group, Advantage Card or score or Vantage Score, I'm sorry.

And that was designed by the credit bureaus.

But the reality is they just didn't want to pay Fair Isaac or FICO as it's better known, any money.

So they use their score.

But at the end of the day, those that, that, that algorithm has proven that it does work.

But the simple thing is if you take credit out, pay it off.

If you can't pay it off immediately when the bill comes in, just make sure that you don't take too much credit off, credit out, and try to keep the utilization under 10% if you can.

Meaning if you, if you have a credit card that allows you a $20,000 balance, don't carry more than $2,000 on that.

And that's between the payment industry and the credit utilization score.

That's 65% of your FICA score.

And that's a big number.

So if you keep those two things healthy, the rest is pretty easy.

Anthony, I'm a fan of your book.

"Your Score." In it, you pull back the curtain on the mystery of credit scoring.

What's one insider secret that consumers almost never realize about these five factors?

You know, piggybacking on Howard's point about the FICO score and what it's comprised of, one overlooked part is that 35% of your FICO score, the biggest chunk, comes down to your payment history, whether you're paying your bills on time, and 30% comes down to whether you know what your balances are on those credit cards.

So it's almost as much of a percentage as whether you pay your bills on time as what kind of balances you have on your credit cards or revolving credit card debt.

But now the most important aspect of that is really the due date on those cards.

Many people come to us and they say, well, my scores are, they're kind of bouncing around all over the place for month to month.

Why is that?

And that's because your credit card balances only report every 30 to 45 days.

So that means even if you pay your balance off in full each month, if it's a different date than when they report to the credit bureaus, your credit score could bounce around wildly.

So I tell everyone that you should find out the reporting dates for each of your credit cards and set up your auto payment to pay it off a few days in advance before that date.

That way your credit score is going to stay optimal every month, in and out.

Cullen, how did you first identify rent reporting as an untapped path to credit building?

Ironically, I was living in Hawaii we talked about earlier and I had moved there and we had a thin credit profile because there it's just a different economy.

And we were renting and I was like, well, how do I get my rent added to my credit report?

And I started googling it, and I couldn't find a solution, except I found a story that says Experian's now going to add rent to credit reports.

And I'm like, oh great, I'm going to go sign up.

Turns out that was a bunch of baloney.

They were only collecting data from a few of the big large property management companies.

So about a year later came back to Colorado and pitched the idea at some startup events.

And people are like, I want my round of my credit report.

And everybody kept compiling it.

And it took me about two years working with the first credit bureau to convince them that this was a good idea.

So we were basically the pioneers of starting this industry.

Is that something that renters need to opt into or does it happen automatically?

There's no automatic way because if you think about the rental market, 70% of renters is like me, renting directly from you.

And you don't have a phone number for the bureaus, nor do they have a system for you to call and say, call and pay this rent.

Lectures come to us.

Sign up, you go and verify that information with the landlord and then report that information on their behalf to the credit card.

That's really cool because it seems.

It sounds obvious on the surface, right?

It does, yeah.

Your rent is going to be one of your biggest things that you're paying for in a regular schedule.

Exactly.

Yeah.

And what's really beautiful about it is that we get to go back in time and report back to when somebody moved in.

So your gentleman, Anthony was about payment history.

So we got somebody has a 10 year old rental, they've been there for 10 years.

We just had 120 green check marks to the credit report in two days.

That is amazing.

So everybody check out, check out Rental Kharma.

Reyna, as a journalist, you've covered both personal finance and consumer behavior.

Why do you think so many people know their GPA from school but never really learn about the credit score formula?

You know, covering both health and wellness and also being an expert in both.

A lot of people don't know the nutrients they're eating either.

And so one interesting part about what Anthony was saying with credit score is what happens.

From my experience coming credit cards and award miles and all these different things that you earn is people use their cards to earn these rewards and then their credit score will drop because they maxed out their card or came closed buying airline tickets, hotels, all these things.

So learning the data reporting is really important and it doesn't matter how much rewards you get if you're messing up your credit score to do it.

But as long as you pay before it's reported those few days before, I think it's really important.

And then the other part that it comes down to when it comes to consumer behavior is just fear and feeling like you don't have a lot of control over it.

But one thing that I wanted to emphasize is kind of a, which I'll get into more in other questions.

A 1, 2, 3 boo approach which is to look at is to know what's on your credit report dispute when you can get focus on paying your bills on time.

And then the third thing that we can also discuss later is start when you're paying off debt, start with the lowest balance credit card first because if you have a limit of 500 and you pay off $50, you automatically drop the utilization rate on that are 10%.

So it's an easy way to make a small dent without having to pay a fortune.

So I'm taking away from this first segment.

Pay attention to the dates.

I mean if you do nothing other than put some of those due dates in your calendar so that you don't forget about them, that's going to make a big difference.

Anybody else want to chime in?

We have a lot of people that come to rental karma in their, in that credit building process.

It's not that they have bad credit, it's just they have very thin credit and a lot of them don't even have a credit card yet.

Literally something like 30 to 35% of Americans don't even have one yet.

And I explained to them, you know, a 30% of your credit score is based on how to use a credit card.

If you don't have one.

It's like skipping 30% of the math test as under questions.

You had to ace the rest of the test just to get a C minus to 70.

And they're go, I'm afraid of credit cards going I don't want to use it.

I understand that.

And I tell them the simple way of doing is you get one credit card, I don't care if it's 200.

And you put Netflix or your cell phone bill on that and you put it on autopay and you stick the card in the sock drawer and that gets you that 30% of the test.

This whole thing of 30% usage, I think a banker made that statement because they wanted to get all that interest on that 30% usage.

I think that's really bad if I think the number should be zero for your usage.

The one thing I would say is that people need to be concerned with is not only how much credit they have now, but also they need to be very leery of people checking their credit because every inquiry drops your score by 4%.

I once had a car dealer call me and they had an overzealous salesman try to find credit for or a loan for one of their customers and hit their credit and did inquiries like 20 times, 20 times 4 is 80 points.

They lowered the person's credit score by 80 points, which is a tremendous amount.

And especially when they were only in there for an hour.

You spend your life building your credit.

Unbeknownst to you, you may have somebody damage it.

So you got to be really careful and really stingy of who can pull your credit.

So that's a great point, Howard.

I tell people, we get a lot of people.

I see credit reports.

I look at them every day for our members.

And that's a very common thing.

It's not very.

It's not uncommon at all.

It's what happens every time you go to the car dealer.

I tell people, when you go to the grocery store, do you give the checkout person your Social Security number?

No.

You should never go and get a car loan at the car dealer.

They are not the lender.

They are your broker.

You around to dozens of them behind your back.

The best way to get a car loan is you go to the credit union and you get a.

There's no down payment to get a car loan.

And they give you a piece of paper says you're approved to get up to, you know, $25,000 or whatever.

That's like walking in with cash.

Car dealer and the car dealers don't like it because they want to make money on the back end from brokering you to some other lender that you don't even know and get to choose who your lender is.

But it's the simple way to buy a car with no down payment and guaranteeing yourself a good interest rate and not inquiring, getting 20 inquiries.

Reyna, you had something to add?

Yeah.

So annualcreditreport.com is the website you go to to get free credit reports from all three bureaus, the main ones and what that will do.

I mean it's estimated that up to half of people have at least one error on the report.

Those errors can obviously like knock your score down and it's just because of misreporting.

So the easiest way to fix your score is actually dispute something and that has nothing to do with your behavior on anything else.

So it just all of this really starts with awareness and that's a great place to start.

Great advice.

Anthony, did you want to add anything?

Yeah, one thing is that they've now started to add what's called a safe harbor, which means you can apply for up to four different types of credit and you'll get an unlimited number of inquiries without impacting your credit score.

For example, if you apply for a mortgage, you could go apply for 10 different mortgages within a 45 day window.

They will lump all of those inquiries into one.

And one inquiry is typically 0 to 2 points or so depending on your profile, so it's not a huge deal if you're one of these select categories.

Student loans are another one.

You shop around for student loans.

You can also apply for apartment loans.

I'm sorry, not apartment loans, but apartments.

If you're applying for a home, those will get lumped into just one inquiry.

A key part to that though is don't think that you can apply for, you know, car loan, a student loan, a mortgage and you know, and those are all going to get lumped into one.

It's per category.

Great advice.

We're covering a lot of ground here.

Let's move on to segment two.

Credit products serve different financial needs and using them wisely are key to maintaining financial stability.

Credit cards offer convenience, rewards and credit building potential, but can lead to high interest debt if balances aren't paid in full.

Personal loans provide fixed payments and lower interest rates than credit cards, making them useful for debt consolidation or large expenses.

Expenses though origination fees and credit score impact should be considered.

Mortgages allow homeownership and equity building, but require a long term commitment with significant upfront and ongoing costs.

Responsible use includes paying credit card balances on time, borrowing only necessary amounts with personal loans, and ensuring mortgage payments fit within a stable budget.

Comparing credit options and understanding their terms helps avoid unnecessary debt and maximize financial benefits.

Smart credit management allows borrowing to be a tool rather than a burden.

Cullen how how should renters decide when to pursue traditional credit versus focusing on building through rent?

Well it's first thing is it's a bill they've already been paying for a long time.

You know, the traditional status is, you know, to build credit, you got to go into debt.

To do it, you got to get a car loan or a credit card.

And a lot of the younger consumers, you know, millennials and so forth, they're fearful of that because they saw what happened to their parents in 2008 and 2010 and they're, they want to stay away from those sort of things.

So just, just getting, just building credit with the things you already pay is huge.

I don't know if you guys have heard that Fannie Mae Freddie Mac is going through an upgrade right now for the mortgage industry to where the, they're finally hitting the upgrade button after 26 years of using your credit score called FICO 4.

Think of software, Windows 98, 8, 9, 10, 11.

Well, FICO 4 is 26 years old.

There's now FICO 10.

That's a big upgrade.

In the new credit score models, FICO 10, as well as all the Vantage scores include not just rent, but utilities in your credit score if you have it reported.

And the only way to do that is using a third party verification to make that happen because utility companies aren't supplying that data to the credit bureaus.

So there's lots of opportunity people to do it without going into debt.

Interesting.

Yeah.

And if any Fannie Mae, when they hit that, they're, they just announced it.

Literally.

It's been going on for five years.

But the, when you go to get a mortgage here in the next few months, the mortgage system that all goes through Fannie Mae, Freddie Mac will be using FICO 10 or the Vantage 4.0 score.

The mortgage person doing the paperwork actually will be able to submit either of those.

So, so when they walk in with their credit karma score on their phone, that's the same score you're going to get your mortgage on.

It'll be interesting to see once that goes into effect any, you know, surprises that are positive or negative.

It's just like when you upgrade Windows and you say, now I can't find where the buttons are.

It's estimated that 33 million more Americans are going to be credit score eligible to go through the underwriting process to get a mortgage.

The VA already completed the process a year ago and two and a half million more servicemen and women are now credit score eligible to get a mortgage.

That's great news, Howard.

I know that you've warned about the dangers of credit cards.

What's a practical strategy that you share with people to make credit cards work for them instead of against them?

Listen, a credit card is a dangerous thing.

If you don't know how to use it, it can ruin your life.

If you know how to use it.

It's like driving a car.

If you don't know how to drive a car, you're going to hit things and cause some damage.

Same thing with a credit credit card.

You need to find a product that matches your goal.

If you know you're going to carry interest and not pay off the balance over time, you need to search for a low interest bearing credit card.

If you want rewards, well, pick a reward that you want.

Meaning if you don't travel a lot, why pick a travel card with benefits?

Go through and certainly look for lower interest rates.

Watch the fees and go for the terms.

When are the payments due?

Do I get harmed using this credit card in any way?

And more importantly, be careful.

Too many credit cards can certainly hurt you.

Going to the last segment.

But having a lot of credit cards is a terrible thing and it's too easy right now to get credit cards and it's too much to keep track of.

If you have eight, 10, maybe even 20 credit cards, you have to be very, very careful of how you use these.

But go through and make sure you pick a credit card that matches what you want.

I like reward cards, but I pay my bills off every single month and I don't carry interest balances, interest charging balances.

And the reward cards I like cash back, cash is king.

I like, I like that too.

I occasionally get, you know, a light slap on the wrist by my wife because I used the wrong credit card for the wrong thing.

Just this last, this last weekend my daughter had about 15 high school, you know, seniors, rising seniors at the house.

So we bought like 10 pizzas and my wife, I came home, my wife said why did you use that credit card?

You're supposed to, supposed to use the Costco credit card.

You get 3% back on the food.

And you get gas and.

Yeah, I know the story, brother.

Which one?

The Anthony credit card is actually a very good product, Anthony.

Well that means your husband credit score was just dropped.

You know, your husband reading took a beating.

I don't know who the reporting agency is.

It's a reporting agency of one.

Exactly.

She talks to her friends.

Don't worry, there's a bigger reporting agency.

Anthony, I know that you work with clients, celebrities, athletes.

I'm assuming that they have access to premium cards and exclusive lending offers, are there lessons that everyday consumers can learn from them about how to choose credit products?

Well, you got to remember that rock stars don't make the best financial decisions.

So they need a lot of help improving their credit as well.

But one thing that people often ask us is how to get this Black Card.

It's this exclusive card from American Express that's invitation only and it's actually something that's accessible to a larger percent of the population than you would think.

But you have to have the perfect credit profile to get it, which is more than just a score.

There's a whole kind of profile behind it.

And one of those things is that you, you really want to have a mix of credit.

So if you don't have a mortgage, for example, everyone should be a client of Cullen's service (Rental Kharma) or one like it to get their rental history reported because they like to see that mix of credit.

They don't want to see just credit cards.

They don't want to see, you know, you know, something that's just really one sided.

They'd like to see that you can handle a mortgage, you can handle an installment loan, which is what Cullen's service has got a report on there.

They want to see that you've had credit for a long time period and that you've been responsible using it.

I like to tell everyone that you know, your credit cards and your, your other lines of credit that report to the bureaus, they're like your friends and your friends are going to report to you, you know, and say that, you know, Andy's a good guy or I don't know, I don't trust him when it comes to ordering pizza.

He might use the wrong card.

They also, you know, they're going to be looking at it over the length of time that you've had these relationships.

The longer that you've had a relationship, the more reputable you are and the more history there is to say like, you know what, Andy's for sure going to pay you back.

So that's one of the things I'd like to say is that if you have the perfect credit profile, you can get a lot more options than you would if you don't have that sort of, you know, good mix.

Yep.

That's why the power of credit can be very helpful in you actually building your wealth.

That being said, that being said, Andy, you know the, there's certain clubs that you want to get into and Black Card is not one of them.

Waste of Money, it gives your ego a little boost.

But you're paying what, $7,000,, $8,000 now a year for that.

Only five, only five.

Only five.

It's like, you know, when you were a kid, oh, I want my family to join this country club.

And then once you get there, why'd we join this country club?

We hate these people.

Same thing with the Black Card.

And one thing that I really want to emphasize when we're using words like perfect is that you can make changes in your credit score pretty fast.

Removing an inaccurate reporting can boost it by 10, 20 points.

I've had it do it for me.

Paying your bills on time, six months to a year, you can see a 20, 30 point boost.

FICO actually has a simulator of like when you make certain changes, how it actually affects your score.

So don't worry about perfect, just worry about making changes.

And something fun that I like to do in general is like ghost expenses.

I love to get rid of expenses that you're not really enjoying.

So if you are, you have a subscription for HBO Max and you only watch a seasonal show, cancel it the rest of the year.

I just recently did an article on cord cutting and we actually saw people save when saving between $75 and $150 a month based on how much they were watching different shows and still doing the exact same things, they were able to save up to an extra hundred thousand in ten, twenty years.

So I mean, just really look at that.

You're getting rid of the things you don't enjoy.

Spoiled groceries is another fun one because who really enjoys that?

But the average household still, I believe, throws away 25 to 35% every year.

So if you think about what groceries cost, $1,000 a year plus 2,400 maybe is certainly a big dent in your credit.

That is crazy.

Yeah.

Let's move on to segment three.

Strengthening a credit profile requires building credit, managing debt and monitoring reports for errors and fraud.

For those starting from scratch, secured credit cards, credit builder loans, and becoming an authorized user on a responsible cardholder's account can help establish history.

Managing debt effectively involves budgeting using the debt snowball or avalanche method and considering balance transfers or consolidation.

Checking credit reports at least annually helps catch errors or frozen fraud early.

If mistakes appear, disputing inaccuracies with credit bureaus and freezing credit when necessary can prevent further damage.

Reducing debt, especially credit card balances, lowers credit utilization and improves financial stability.

A strong credit profile leads to better loan terms, lower interest rates and increased financial opportunities.

Staying proactive with credit management ensures long term Financial health and minimizes risks associated with high debt and identity theft.

Anthony, you've seen credit repair at every level.

What's a foundational move anyone can make to strengthen their profile, whether they're starting fresh or rebuilding?

That's a great question, Andy.

The first thing is to check your credit.

As Reyna has mentioned.

You should definitely do with, you know, annualcreditreport.com because as she mentioned, there are so many errors and mistakes on the credit report and people will assume just because they make a lot of money or that they make decent money and they pay their bills on time, that their credit score might be optimal.

And that's far from the truth.

It's really far from the truth.

The second thing you want to do is to make sure that you understand what you're aiming for.

What does a good credit profile look like?

Among those things are having seven to nine trade lines, which trade lines are anything that report to the credit bureaus.

You know, you want to have a credit card, you want to have a mortgage, you want to have your rent.

You know, something like that that's going to report, and then you want to have it reported as long as possible.

The longer, better.

You know, again, they're like relationships.

Someone that's known you for 10 years is going to have a lot more weight when they say whether you're reliable than someone that you've only known for six months or a year.

So you want to do that.

And then as Howard mentioned early on, you want to keep your credit card utilization low.

You know, if you can keep it below 10%, as you mentioned, that's the perfect number right there.

And then you also want to make sure that you know those due dates, because it doesn't matter whether you pay that bill off in full or you keep it below 10% as long as you are making sure that you're keeping those balances below that number when they actually report to the credit bureaus.

And then the final thing is that you want to have that right mix of credit.

You want to have, you know, a variety of different types of credit.

And then once you have that perfect credit profile, that's really the best thing that you could, you could, you could do to strengthen everything.

And that way when something disastrous happens and you get a late payment or you can't pay off that balance in full each month, it's going to have less of an impact.

It's not going to be quite as devastating as it would be for someone else.

Excellent tactics, Reyna.

I know you've written about navigating financial stress.

What role does mindset have in actually helping people to follow through on credit building strategies?

Yeah, I would say financial behavior and probably 95% of finance.

And so I think it just starts off with I don't have to do all of this at once and I don't have to be perfect because everyone worries about being perfect.

If you're at a level where that is something that you can achieve fairly fast, then you can think about it, think about it as a goal.

But start off with things that are manageable like comparing your auto insurance and saving money there, doing little things that make a difference versus worrying about the big thing.

And one thing that I want to touch on with what Howard was talking about with rewards is there's also, there are also reward cards that will pay down your student loans.

And so really compare the interest every month because it's.

If you're going to carry a balance, that's the most important thing above anything else.

Who cares if you get 2% back and you're paying 15 to 20% every month when you could be paying 10, you know, so I think that that's really important.

And then really think about like take a breath.

I always say like the five second rule, which is also me before speaking sometimes as well, is to at least give yourself the count to five before picking a credit card and preferably spend an hour comparing cards before you decide on one.

As I tell people, the same with schools.

Always spend more time picking out a college than you would an outfit.

Good advice, Cullen.

I think you've warned against credit builder loans and apps.

Why do you think some of these products can sometimes do more harm than good?

Great question, Andy.

It's actually in the.

We have a thing called the Rental Karma Learning Center, and I tell people getting a 720 credit score is really easy.

It is.

It's not hard at all.

But keeping it is 10 times harder.

And if you learn the nine red flags that I have in their learning center, those will keep you from going backwards.

In these credit builder loans and these credit builder apps, they are really only useful for a very small percentage of the population.

2% to 3% people that are brand new to credit young and maybe dad took them to the credit union to get them a credit builder loan to get them started before they maybe get their first car loan.

But some of these credit builder apps, they're literally charging someone 18% interest for me to give you $100 in my money every month and you hold on to my money and green check mark on my credit report every month.

The double edged sword here is that after a year the account is closed and those 12 check marks you just put in my credit report no longer have an impact in my credit report.

All about open accounts, not the ones that are closed.

Just like when you pay off a car loan, people go, why'd my credit score go down 40 points?

Well, six years of history or seven years of history just went out the window.

So it's, it's just really not useful.

And one thing I see happening most often with these credit builder apps that are out there now is people get go and get not just one of these, they'll go and open two or three or four of them within a one month period of time.

That's like getting four speeding tickets in a school zone.

Your score is going to go way down because you got four brand new accounts in your credit report.

And it's just they don't know the pros and the cons of it.

They only see the marketing side of it.

And sadly these companies are not transparent about the fine print of what's really going on.

Debt reduction is a huge part of strengthening credit.

Howard, do you have a preference between avalanche or snowball methods?

What do you recommend most often and why?

That's a great question, Andy.

Listen, I'm an accountant.

I am a guy who pinches almost every penny he can because I'm fiscally conservative.

And you know, there's different theories.

Take the smallest account and pay it off just for the psychological benefit.

At the end of the day you should be paying your highest interest bearing credit card and regardless of the balance and knock that out.

When that's done, move that payment to the second highest interest bearing credit card and double up and start to start to work out a plan that you liquidate all your credit.

Certainly if people need more help than that, go to debt.com or one of the other credit help places, credit relief, debt relief places and get more sophisticated help than that.

But certainly people should be focused, clearly focused on the highest interest bearing credit cards and, and focus on that and knock that out.

The one thing that I will say, and it's a common theme throughout all these questions, are if you want to improve and strengthen your credit profile, it starts with you.

You need to pay your bills on time.

No matter what happens, you have to pay your bills on time and that's an incredibly important thing.

If you don't pay your bills on time, don't expect to have good credit.

Anybody else want to add?

Reyna...

Yeah, two things...

now, I agree with Howard's strategy.

Most of the time.

Where it would differ as far as as paying off that card first or paying it down first is if you are planning on taking out credit such as a mortgage in the near future.

You do.

How much payments you have also matters.

But it will, it will affect you if you can get your score up just a little bit.

So it's a faster way to increase your score.

But if you're looking at a range, I'm not going to be doing anything like that that in a year or two, then yes, always highest interest first.

So that's why we change it.

The other thing, as far as another fact that I really love this Rocket Money.

And then you can look at all your bills in one place.

And for me, it is life saving to say, okay, this is what I'm actually spending and where I'm spending it on, what cards, from what accounts, and see.

I used Mint for the same thing.

And so when Mint disappeared, I switched to rocket money.

But it took me a few comparisons like you would do with your credit cards to find the one that I really liked.

Great tactics.

Let's go to segment four.

Fair lending laws protect consumers from discrimination ensuring equal access to credit regardless of background.

Regulations like the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders for from making biased decisions based on race, gender or income sources.

Predatory lending remains a risk, with payday loans, hidden fees, and deceptive terms trapping borrowers in cycles of debt.

Consumers can protect themselves by reviewing contracts, avoiding high interest loans, and reporting unfair practices.

Credit reporting agencies collect and distribute credit data, giving consumers the right to access reports, dispute errors, and freeze accounts to prevent fraud.

The power imbalance between lenders and consumers often favors financial institutions, making policy discussions on interest rate caps, fair lending enforcement and financial literacy education essential.

Strengthening protections and increasing transparency in lending practices are key to promoting financial fairness for all.

Howard, you've called out predatory lenders before.

What are the most dangerous traps you see people falling into again and again?

People don't understand what they're getting into.

You know, sometimes emotion takes over.

Oh, I need a loan, I need money.

But they have no idea what they're signing up for because frankly, people aren't trained to, to read the disclosures that most reputable lenders, all reputable lenders, give you, but they're not reading it thoroughly.

They may take the advertisement at face value and not understand that if you make a late payment, this is what will happen if you don't do what we want you to do to be a good person and pay your bills on time.

This is what's going to happen.

So people don't read, they don't understand.

They mostly focus on the end goal.

I need this TV, I need this car, I need this payday loan.

But they don't understand the ramifications.

Reyna, you've written about consumer protection protections.

Are there things that you think every everyday borrowers underestimate about their rights?

Yeah, especially in the world of student loans that there is a federal (Office of The) Ombudsman that you can contact if you don't feel you're being treated properly by your servicer.

I think also just making sure that you really as said like know what you're getting into.

I had a company once told me, well everybody reads their disclosures.

It was like no, if anyone's watched the South Park Human Centipede episode, those disclosures, you never know what you're getting into and you may end up part of a human Centipede.

So like really read that.

But make sure that you are.

If you don't feel a credit card is treating you right, make that one the one that you pay off first.

And you can certainly make federal complaints and state complaints if you do have issues.

And there are also groups that can help you out there, nonprofits, etc.

And you should look at who are the financial protection kind of groups in your area that can help you as well as to contact the state.

And the banking commissions of every state are available and they can also help you with resources.

So you're not alone in this.

But try to read your actual disclosure so you don't get to that point.

Anthony, where do you see the systemic biases most embedded in the current credit system?

Well, I mean I'll answer that with a joke.

There are two different types of lending institutions that can lend you money and then change the terms at will.

Only two of them.

One is the mafia and credit card companies where they could say, you know, this is how much we're going to lend you.

Actually we had a dream and it's going to be less and then this is the interest rate.

So one thing I'll really point out to people is that if you were to ask people what what their, their credit card interest rate is, they're generally going to state what it might have been when they first got it.

But they have no idea what, what the interest rate is right now because it shifts.

Those rates that they quote are teaser rates, which means that they're only good for a little bit of time and then after that they're going to change.

And if you're the type of person that just says I can't pay off my credit cards, you know, in full each month, then you should absolutely know what the interest rate is at that given moment in time as well as what the interest rate is if you transfer that money to a different credit card where you might be able to get a better interest rate or even 0% for a certain period of time and give you more of an ability to knock that balance down over time.

Kudos, Anthony.

I want to go back to the predatory lender thing because I'm ridiculously passionate about this.

To me, it's not even about the fine print and reading that.

People actually just need to know where and tell you not go in the the front door in the first place.

Because these predatory lenders are legitimized in our society.

Because the rental furniture store is right next to the grocery, right next to Kroger, and right next to that is a store that says need cash for Christmas?

It doesn't say in the window 85% interest loans out here for 70 year old grandmas with a 700 credit score that don't know what they're doing.

You got the payday loan stores, the check cashing stores, the title loan stores in some states are absolutely, they are the mafia.

Like Anthony was saying, the "buy here, pay here" car lots which are absolutely horrible.

One out of three cars that "buy here, pay here" a lot is repossessed within six months.

Your credit cards.

That's actually kind of predatory too when you think about it.

You actually put in your own money and you're paying interest if you have a balance on your own deposit.

You got stores like Fingerhut and cons that are these online merchants that pretend to, they, they advertise.

I saw an advertisement for Fingerhut.

It had seven on one page that said the word build credit seven times.

And they're literally selling toasters for $50 that you would pay $20 for at Target and charging exorbitant amounts of interest.

So you got to, you just need to know what these things look like so you can just stay away from them, period.

That simple.

Buyer beware.

Reyna.

You know I was, I'm trying.

One of the things is, is to really think about like before you get out a short term loan, am I going to be able to pay it back?

I think there are times when the rental furniture places may be great.

But before you do that, look at Facebook Marketplace.

I think really look at your options for where you're able to buy things and then get wait until you can get a non secured credit card and just keep that balance low if you can.

And when you see the offers, if you're subscribed to Experian, if you subscribe to FICO, they're monitoring your credit card score for you and they'll be able to tell you if you're likely to get approved.

So you don't have to get that credit ding to figure out if that's going to be a good credit card for you.

But yeah, so the payday loans, it can be hard, title loans, I mean if it's title, your car, if it's the title to different things, I mean there's times when you're just desperate for money and then what are you going to do?

But really look at all other options that you might have, including workplace loans, including if you have a credit union that may be able to lend you money.

Do a quick online search, see what other options you have before you start to think about that as your choice.

Take the time so that you can strategize and make wise choices.

Let's bring it home and go to the last segment.

Technology is reshaping credit and lending through fintech, AI and decentralized finance.

Fintech companies streamline loan applications, expand credit access and use alternative data for credit assessments.

AI driven credit scoring analyzes vast data sets for faster decisions but carries risks of bias and lack of transparency.

Decentralized lending platforms leverage blockchain to connect borrowers and lenders directly, reducing costs but increasing risks due to minimal regulation.

Blockchain enhances security, transparency and efficiency in lending while supporting DeFi (decentralized finance) platforms and alternative credit models.

As digital credit evolves, consumers must stay informed, understand their rights and evaluate new credit products carefully.

Responsible digital habits, including protecting personal information and verifying financial platforms, are essential in this changing landscape.

The future of credit will be shaped by technology, but informed decision making remains key to financial security.

Cullen, what's your vision for how technology can continue to expand financial inclusion over the next decade?

Well, I think the best part is they're looking at the world we live in today, not what we did 30 years ago.

And they're working against a system that has pretty much been stuck and how things were 30 years ago.

Like I was saying earlier, they were using FICO 4 for underwriting of a mortgage.

I mean, it's just we don't live in that world and you shouldn't have to get a credit card just to prove that you can have a, that you're credit worthy and be held to 30% interest.

You know, and there's a lot of companies that are making big impacts out of there.

One of my favorites are the Neo banks which is like Chime, Dave and Varo and these guys.

They have really disrupted brick and mortar banks with a couple simple functions.

One, no expensive brick and mortar stores.

Two, no overdraft fees, which is where the big banks have been making.

You know, it was only a couple years ago the big banks were making $10 billion a year on overdraft fees.

Well, Chime comes around and says no overdraft fees and you can get up to $500 access to your paycheck early if you have direct deposit, deposit -- bye bye payday loan stores.

And those are closing in quite a bit of communities because of that.

Over 25 million Americans have gone to the online Neo banks where they're not getting feeʻd to death and they have better consumer protection.

I mean, it's really great.

Anthony, do you see decentralized finance and blockchain playing a legitimate role in mainstream credit or is it still too risky?

I'll tell you, I believe that it will in Howard's world of debt that eventually they're going to have to use something like blockchain to keep track of who owns what debt.

It's a wild wild west world when it comes to collecting and selling debt.

It's sometimes they're done on thumb drive, sometimes they're done on just the whim, sometimes they're sold to multiple people.

But I'll tell you that I believe that it will have a, a hand in debt management eventually.

What are your thoughts, Howard?

There are so many new fintech tools popping up daily.

How do you advise people to tell the difference between what's really helpful, what's a great innovation and what's just another shiny trap?

Listen, it's all traps.

Unfortunately it is.

I mean it's meant to make you take out money, take out loans that for money that you don't have, the money to repay.

The challenge with using some of these new fangled services such as Chime and Neo banks is that a lot of lenders won't deal with them because their default rate is so high.

If they see a Chime bank they're like we're not going to lend to you because you have Chime.

The other thing that I will tell you is that these buy now pay later (BNPL) situations that are being offered and they're growing rapidly and they weren't being reported on.

The credit bureaus now are being reported because early on the defaults were so big and they were losing so much money.

That being said, consumers in general are up to their neck in credit and they've basically worn out all their used up all their available balances.

So now they're going to find more credit to get themselves even deeper in debt.

And eventually it's like quicksand.

You keep sinking, sinking, sinking until you're under the quick sand.

And certainly the buy now, pay later debts are just another trap to get you in debt, keep you in debt.

And at the end of the day, I tell my clients, the lender is not your friend.

They aren't there because they like you.

They want to extract as much money out of you as they possibly can and they will.

They're smarter than us.

They have sat there and they have studied this and they have done the homework that they make you offers that make you want to do business with them, but they're not in your best interest.

At the end of the day, pay your bills, don't use your credit cards.

Pay cash if you can.

If you can't, pay your bills when the bill comes in or when the credit card statement comes in.

But be very leery of all this new technology that's supposed to be good for you because it chances or it's not.

Based on what Howard said, I'm holding onto my wallet just a little bit tighter.

Reyna, what role do you think financial education needs to play as technology makes borrowing easier but maybe still more complex?

Yeah.

So I want to say a couple of things to piggyback on both what Cullen and Howard said about Chime.

I actually have Chime and Citibank because some things they won't work with Chime and they'll work with Citibank.

But my deposits get in a day earlier on Chime, so I think there's a place for both.

And I do like that Chime does payday lending without a fee, which is really wonderful compared to the predatory lenders.

So it's really knowing how to use these products.

And it may be that you're able to pay your credit card on time because you used this in an emergency situation.

It just shouldn't be every paycheck you're having to borrow because it will catch up with you.

So I think that that's one thing and I think the more you know, the better off you are.

So definitely read up as much as you can.

I have wallets and waistlines to learn about both nutrition and finance.

Andy and I and Cullen are part of the Financial Influencers Network, FIN, which is working with brands now to get financial education out there to as many people as possible.

And we have 10 million people following among us so we just got to get it out there as much as possible.

And one thing that I found in dealing with student loans for a long time is, is that with the public service loan forgiveness, whether someone had their student loans forgiven or often because of making one or two mistakes, they had to choose certain payment plans, et cetera.

And if they saw articles that were more clickbaity where they just saw a headline or they saw a couple of key points that didn't really emphasize those things that you shouldn't do.

It's why at one point I believe it's about 90% of people were getting denied that really thought they were going to get approved.

So don't lose tens of thousands of dollars because you don't have the information and brands help us get the word out there as much as possible.

Yeah, I want to add one last thing about this.

We're talking about Chime and the big banks and the overdraft fees.

Is everybody here heard of the blacklist called ChexSystems?

Raise your hand.

Okay.

ChexSystems is a company that was created by the big banks years ago and it was to basically create a database of anybody who ever had a checking account closed on them on the negative balance.

And I would wager that probably 90% of these accounts that were closed with negative balances were people that were NSF overdraft feeʻd to death and they could not cover the next month's rent because if the direct deposit went in to that old checking account the first person who gets paid is the bank for their overdraft fees.

That what was caused people to run away from the banks because they couldn't even make the rent because of it.

Then they end up going out the check cashing store with their paycheck to get the money to go and pay the rent etc.

The one thing that has made these neobanks so successful and popular is that they ignore the blacklist because they see it as evil.

It's mafia like.

I'm sorry, it is just pure evil.

And the good that they are doing to help those people have the basic function of a checking account without overdrafting the death.

Keep in mind you'd get those overdraft fees.

You go to the grocery store, swipe Your debit card, it would let you go and make that charge.

It wouldn't decline the charge.

It would just go ahead and say, well, we're going to get that 35 overdraft fee.

Right.

And if you think about it, if your credit card is maxed out, it gets declined.

The banks have had that technology for years.

They could have been doing that and they chose not to.

So now the fintech of Chime and these others have said, well that's wrong.

So we're going to come and go around that and not overdraft people to death.

We're going to ignore the blacklist.

That's why the big banks have been losing.

They've lost over 25 million consumers to these neobanks in just the last six, seven years.

Do Howard or Anthony want to answer Eduardo's question?

He was asking, let's see, he was asking when you have a good FICO score or lower FICO score.

Oh, he wants to know the pros and cons of whether having a good FICO score or having a lower FICO and lower debt.

I don't think you really have to choose between one or the other.

If you lower your debt, especially your debt utilization percentage, then your FICO score is going to go up.

And with a stronger FICO score, you can often negotiate to have a better interest rate on your credit cards that can also in turn end up paying your credit card debt faster.

So, so you want to pay your credit card, your credit cards down in order to increase your FICO score.

It's like being at a high school dance and you're the star athlete and then there's the guy who nobody knows and everybody wants to dance with a star athlete.

In this case, the star athlete has good credit and everybody wants to dance.

So.

Right.

Raising your FICO score is very important because you're going to get better opportunities, better rates and frankly more opportunities to expand your credit horizons and it'll save you money in the long run.

So pay your bills on time, make sure your utilization is in good shape.

Your mix of credit is about very important thing as well.

But go through and do everything you can to, to eliminate as much debt as you can.

That's outstanding.

You don't need to carry balances on those credit cards and just doing that and, but plan, go out and sit down and do a budget and figure out how you're going to chart your path out of debt and, and that will enhance your FICO score and your vantage score.

So the psychology behind it that I was reading into it is the idea that sometimes people think you need a bunch of credit cards to increase your score.

If you get one card that you paid down, and especially if it's one that you've had for a long time, you don't have to just charge, charge, charge, think about that 10% if you can, then you can have both the low debt and the score.

If you have no debt at all, that may not be great for you.

And you want to make sure that it does report something each month, even if it's like $10 of debt that you have.

Well, I think we will leave it there.

This has been an incredible conversation.

One of my favorite takeaways from today is that credit is...

it's not just a score, it can be leveraged.

It's a tool that can either hold you back or open doors to financial freedom, depending on how you use it.

So here's my challenge to you, the Inspired Money Maker this week, pull your credit report.

Go to annualcreditreport.com, get your free credit report, review it, and it's the first step in taking control.

Look for errors, as our panelists have mentioned.

Understand what's driving your score and make one small improvement, whether that's paying down a balance, setting up an auto pay, or reporting your rent.

Because as we heard from our guests today, even small actions can have a huge impact over time.

If you enjoyed this episode, be sure to share it with a friend who's working on their financial journey and subscribe so you do not miss future conversations like this one.

A few more things before you leave and go on with your day.

Let's connect on LinkedIn Find me by Searching for "Advisor Andy." Inspired Money is created and produced by me and Bradley Jon Eaglefeather.

Bradley is behind the scenes during the live stream and edited segments.

Chad Lawrence does our graphics, animations and editing.

And last but not least, most certainly not least, I want to give a big shout out to our amazing guests today.

Go follow their work and keep learning from the best.

Many of our guests have books, so make sure that you check those out.

Howard Dvorkin, check out his books: "Power

Up: Taking Charge of your Financial Destiny" and "Credit Hell: How to Dig out of Debt." You can follow his mission and his work at howarddvorkin.com and debt.com.

Anthony Davenport is author of "Your Score: An Insider Secret to Understanding, Controlling and Protecting your Credit Score." He's founder of Regal Credit Management.

Learn more at anthonymdavenport.com.

Cullen Canazares, he helps renters build credit with Rental Kharma.

You can find out more at rentalkharma.com and he referenced the learning center, which I think is rentalkharma.com/learning.

And Reyna Goble, journalist, speaker, and author of "Graduation Debt." Her nutrition course is available at bestnutritionclassever.com and you can find her content at walletsandwaistlines.com Sometimes I could hear Reyna and her famous dog, Woof Woof.

We haven't really seen him yet, but her dog is a famous influencer.

Yes, he is.

And really funny.

I have been using his conditioner lately, his leave in conditioner.

It's a great product, DOG, and it is the best because as you can tell, we have the same hair texture.

It's true that.

You know what they say, that you and your dog over time start looking like one another.

I hope someday I do.

Do any of the guests want to plug anything in particular or specific?

Anthony?

Yeah.

I should also mention that my quote unquote day job primarily consists of protecting people's credit.

Now, so we block access to the major credit bureaus, sometimes including check systems, so that if a thief knows your name, address, social, date of birth, they got into one of the thousands of breaches just this year.

We're going to prevent them from being able to utilize that information and attack you.

So once you get this great, perfect credit profile and credit score, you'll want to protect it.

That's what we do.

Yeah, how to keep your guard up.

Anybody else?

Listen, credit is very difficult.

The more you educate yourself, the better you are.

There's fine representatives that know a whole lot of stuff about credit, but you got to take it by step.

If you go to debt.com you will learn a tremendous amount of information and, and follow the advice.

It's been developed over the last 30 years and even some of it I actually wrote.

But more importantly, the reality is educate yourself.

This, we're talking a big part of your money that's going towards this.

It's a real thing.

But certainly follow the advice of experts.

Don't worry about what it says on TikTok or Instagram.

Go to the websites, go to the source and find one you like and certainly educate yourself because it is tricky out there.

Well, we got a lot of valuable advice today and.

Oh, Reyna, go ahead.

Oh, I just wanted to add to what Howard just said because, because it is like this trend, I have very smart friends.

They'll tell me, well, I hear this on Instagram and I'm like, from who are they qualified?

So sometimes what's good about Instagram is it may be the thing that inspired you to go find the real research.

So think of TikTok as inspiration for TikTok or Instagram.

It's like, oh, I really want to learn about this.

I don't know if it's accurate.

The relationship experts may have never even been in a therapist's office.

So you do want to, like, then go and find real sources, both online and in person if you need.

The other thing I want to emphasize, because I'm all about, like, resources that you can just get a hold of is credit unions.

If you belong to one, they do have financial advisors there, credit counselors that are free to use.

So.

And at schools, there are student money management offices.

It's one of the things that I really advocated for on campuses and that's growing.

So really know what your resources are and know that you're not alone.

There's plenty of people that can help you.

And the video on TikTok is just inspiration.

The video on Instagram is to find the real stuff.

Great.

Well, thank you, Reyna.

Thank you, Cullen.

Thank you, Howard.

Thank you, Anthony, for really helping to demystify credit today and give us great advice and the tools to go back and take some time to think about and analyze our credit and then take steps that are actually going to make a difference.

So thank you, our guests, panelists, for joining us today.

Thank you for being a viewer and listener of Inspired Money.

Inspired Money returns next week.

I think we're looking at Wednesday, September 3rd, if not Thursday, September 4th.

Gonna see how the scheduling falls finally.

And our

topic is going to be "The Future of Cryptocurrencies: Exploring Blockchain and Digital Assets." Should be a timely conversation.

I look forward to seeing you then.

Until next time, do something that scares you, because that's where the magic happens.

Thanks, everybody.