Money Talks, So Should You

Q&A: What is the best way to build or rebuild credit?

Matthew Illian
by Matthew Illian, NAPFA (@MarottaOnMoney)

Not long before proposing to my wife, I joined the ranks of men who go through the ritualistic education in the 4 Cs of diamond quality.

Like the others who have gone before me, I felt immense pressure to make a “forever” decision that would communicate my love, but I had a small problem: I was nearly broke. It is during these emotionally driven moments that propel many financial plans into a tailspin. Building your credit requires a plan to deal with your money but, more importantly, a plan to deal with your emotions.

When setting off on a new course, you will need a clear map and a crew of accountability partners. The map represents a written plan. You are less likely to achieve goals if you never put them down on paper. The shipmates represent good friends, perhaps your parents, siblings or spouse who you are willing to share the journey with you. Too few money management skills get shared because too many people are unwilling to discuss their finances. Have the courage to talk about specific goals. Any plan that deals with something as emotionally charged as money should be shared with other trusted advisors.

READ: What credit card advice should I give my children? 

There is one “c” that is foundational to your ability to access credit, and that is character. Lenders want to know if they can trust you to repay your borrowed funds. If you have run into credit problems before and it was not the result of an unforeseen natural disaster, you likely need to address some attitudes and emotions that are expressions of your character.

Beware of any offer to fix a debt problem quickly. Consolidating loans is no magic wand and typically generates big fees for the “assisting” agency. Changing your attitudes about money and your financial actions in times of emotional stress requires determination and endurance that will ultimately reveal a trustworthy character. 

 

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Matthew Illian, CFP, AIF, is an advisor at Marotta Wealth Management, Inc. Illian is a member of the National Association of Personal Finance Advisors (NAPFA), a fee-only professional association and a Dimespring knowledge partner.