Self Financial Head of Community and Financial Expert Monique White lists the best ways to avoid and offset delinquencies while keeping better track of spending to improve one's credit score.
"If you do find yourself delinquent and you're trying to get yourself back on track, you've already contacted your credit card companies but you still feel crippled from it, you can always contact free counseling or[a] credit coaching agency that can provide those types of free services," White tells Yahoo Finance. "They can come up with a game plan, they can sit down and contact your credit card companies and find ways for you to start making on-time payments again."
BRAD SMITH: Well, it's easy to feel overwhelmed by bills. Millions of Americans are drowning in credit card debt, all while struggling to pay their bills on time and fight off high interest rates. Nearly 3.5% of card balances were at least 30 days past due as of the end of December, that's according to new data published by the Federal Reserve Bank of Philadelphia.
So with credit card delinquencies on the rise, how can you feel financially secure? For more on this, we've got Monique White who is the self financial head of Community. Monique, great to see you here. A lot of people are trying to figure out what is the first step that they can take to get out of delinquency in the face of piling up debt as well here. Let's hear you.
MONIQUE WHITE: Yeah, that's a great question. If you find yourself struggling with making on time payments, there's three things that you can do. The first is to take a look at your budget. Sit down and look at your credit card and your bank statements to get exact figures. Don't use projected cost or estimated amounts. Get the real numbers so that you can realistically know how much you can start putting towards your credit card debt.
The next thing that you can do is to contact your credit card companies. Keep that open line of communication. Now that you know you did your budget, you know how much you can start putting towards your payments. You can be honest and explain your financial hardship and come up with some type of payment plan so that you can get yourself back on track.
And the last thing is to consider adding additional trade lines that can add positive payments to your credit report since that's the biggest factor of your score. And while you might not want to add any additional credit cards or loans, there are free credit building products like self-free reporting that can generate positive payment history that can help you build your credit.
BRAD SMITH: You know, Monique, it's interesting. We continue to talk about and hear about the resiliency of the consumer, but the way that consumers are spending is visibly different when you hear about data points like this. Help us make sense of the strength of the consumer as it relates to the economy and that difference in the way that consumers are spending right now.
MONIQUE WHITE: Right. So you know, we know that people are relying a lot more on their credit cards to supplement their income because of holiday spending, higher cost of living, rising interest rates, and people are just feeling extremely stretched right now. And when you're just trying to cover your basic monthly expenses, your credit card payments just do not become a priority right now.
BRAD SMITH: Certainly. Now, there are some ways that people can get their credit back on track. Let's give them some of those tips, especially if they're starting to miss payments. What is the way that they can reverse the course there?
MONIQUE WHITE: Yeah, so if you are-- you do find yourself delinquent and you're trying to get yourself back on track, you've already contacted your credit card companies but you still feel crippled from it, you can always contact free counseling or credit coaching agency that can provide those type of free services. They can come up with a game plan. They can sit down and contact your credit card companies and find ways for you to start making on-time payments again.
BRAD SMITH: Is there good debt as it relates to credit cards? I mean, we hear about good debt versus bad debt all the time, right? But as it relates to credit cards, how does that calculus differ a little bit for consumers out there?
MONIQUE WHITE: Yeah, when it comes to consumer debt, that wouldn't be considered good debt, any type of assets that you have would. So right now, people are just focusing on trying to pay down their credit cards, especially with the higher interest rates right now. And that's just their main priority.
BRAD SMITH: When we think about the other things that go into a credit report, where else can consumers have those conversations with their institutions to figure out where there are payments that they make frequently that can also factor into their credit score and help improve the equation for them a little bit more rapidly?
MONIQUE WHITE: Yeah, so the biggest factor, the two biggest factors of your score are your payment history, which is 35%, and your credit utilization, which is 30%. So if you have those two things working against you, that's going to damage your score. So contact your credit card companies to see if there is a way to either erase that payment or moving forward. Come up with some type of payment plan that fits into your budget so you can continue to make on-time payments. And once you see your utilization going low, you'll be able to build your score back up.
BRAD SMITH: Monique White, thank you so much for taking the time here with us today, self financial head of Community. I appreciate.
