Dear ESME Sisters,
Many years ago, when I found myself a divorced Solo Mom of a toddler, I was unprepared for how to earn—let alone manage—the money and good credit health I needed in order to support my young daughter and myself. It was a long road of learning the hard way, but good did come out of it. That’s how I began the journey that led to my career and eventually starting my own business. Ever since then, it has been my passion (and my business) to empower women and single parents to manage their credit and financial health so that they can achieve their goals and dreams and not have to learn the hard way, like I did.
So, to that end, I want to use this opportunity to offer you the most valuable few tips that have helped countless women and solo parents to take control of their credit health and financial lives.
Tip 1: Understand the role of credit in your life. Many people whom I work with are in a financial and credit mess, and they ask me to help them improve their credit health. The first step toward that end is to examine with them the role that credit plays and should play in their lives. Credit is a tool, not a crutch to be used in place of wise financial management. It is a tool to help you buy a home for your children to grow up in or a car so you can get to work and earn a living for your family. Credit causes trouble when we use it to buy superficial things we don’t need and then can’t afford to pay the rent or mortgage because our credit-card bills are so high. So, take a hard look at how you use credit and whether you need to modify your behavior to avoid getting into a credit disaster.
Tip 2: Keep an eye on your credit report. One of the most important first steps to improving your credit and building a healthy credit score is to check your credit report at least once but, ideally, twice per year. You can get a free annual credit report at AnnualCreditReport.com and buy your FICO score at myFICO. Make sure to examine the entire report from each of the three credit bureaus—Experian, Equifax, and TransUnion—and verify that all the information on the reports is correct. Remember that your credit has always been your credit alone and is tied to your Social Security number. If you had joint accounts or joint credit with a past partner and if you or your ex didn’t pay your bills, that also would be reported on your credit. Going forward, make sure that you no longer have any joint accounts with your ex-partner and that he or she cannot ruin your credit. Also, if there are any erroneous accounts, names, or addresses, that may signal identity theft, and you need to report it to the credit bureau and creditor right away. If you find any outstanding bad debts, pay them off and keep written documentation of all interactions with creditors.
Tip 3: Take steps to improve your credit score. Knowing your credit score and what’s on your report is a great first step to building healthy credit. Once you’ve done that, it’s time to put into practice healthy credit habits for the long term that will help your score improve as time passes: 1) Pay all your bills in full and on time, 2) pay down balances on revolving credit to 10% or less of the total limit, and 3) have a variety of credit accounts such as home, home equity, car, and credit card. This will help you avoid having all your available credit on one type of account, such as credit cards.
As a solo parent, your kids are relying on you to make good decisions and to teach them how to be successful when it comes to work and finances. By following these tips, you will be well on your way to taking control of your financial and credit health and, in turn, setting a good example for your children. Also be sure to check out Sister Chat and our closed Facebook group ESME Work and Finances, as well as the many Tribes where you can find support and connection. And remember, I’m here to back you up! If you have any questions or concerns, drop me a line at firstname.lastname@example.org. I’m happy you’re here!