The Credit Guy's top 5 money tips

Our loyal columnist leaves us with his best money lessons

By Todd Ossenfort

The Credit Guy

The Credit Guy, Todd Ossenfort, is a credit expert and answers readers' questions about credit, counseling and debt issues. Ask a question 'The Credit Guy' archives

Dear readers,
Many thanks for reading the Credit Guy column. Your submitted questions have allowed me the opportunity to help, in a small way, guide you to better money management skills and use of credit. After three years as the Credit Guy, I am hanging up my keyboard. It is bittersweet!

My hope is that you take away from our time together the importance of managing your finances in a manner that protects your good credit and future financial well-being. With that in mind, I'd like to leave you with my top five Credit Guy tips.

1. Saving is essential to avoid unwanted and often problem debt. If you don't have an emergency savings account of six to 12 months of income saved, start today. Save whatever amount you can regularly (each pay period) even if it is only $25. As you get in the habit of saving, increase the amount as you can afford to do so. Save something every month, even if you are struggling to pay down debt.

2. Never co-sign, especially for a family member. Generally speaking, if a lender is not willing to loan money to someone, you shouldn't either. Co-signing for a loan or credit card for another person is a great way to ruin a valuable relationship -- and your own credit. If the person can't or won't make payments, your credit will suffer and you will be held responsible for paying.

3. Check your credit report annually at AnnualCreditReport.com.  Place a reminder on your calendar and get your free credit report each year.  Reviewing your credit report at least annually will help detect identity theft early. It'll also help insure there aren't any inaccurate entries on your report.

4. Avoid using credit to extend your income. Living within your means is key to avoiding large credit card debt. If you are using credit each month to pay for essentials, you need to take a hard look at your monthly spending and make cuts to bring your spending in line with your income. Simple budgeting 101.

5. Know your rights when dealing with collectors and use bankruptcy protection when it is needed -- and only if it is needed. Learn your rights under the Fair Debt Collection Practices Act and keep collectors from intimidating you into promises you can't afford to keep. First, explore all your options, but realize the bankruptcy laws are in place for a reason. You should take advantage of them when it is necessary.     

And keep in mind, having the best personal credit history you can is important, but you can always start today to improve your financial situation. With time and perseverance, you will have the credit you want and deserve.

Thank you for the opportunity. And remember, take care of your credit!

See related: Know your rights: Fair Debt Collection Practices Act,  The risks you face when co-signing a loan, Emergency fund money critical in a crisis

Todd Ossenfort is the chief operating officer for Pioneer Credit Counseling in Rapid City, S.D. Pioneer Credit Counseling has been a member of the Association of Independent Consumer Credit Counseling Agencies since 1997.

The Credit Guy answers a question about a debt or credit issue from a CreditCards.com reader each week. Send your question to The Credit Guy.

Published: March 14, 2011

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