Susan Lindson, at Oakland Livingston Human Service Agency in Pontiac, said several hundred people will likely receive some credit counseling through the programs offered by the social agency during the year.
Many will have encountered financial or credit problems for any of a variety of reasons, such as illness or job loss.
‘There are very few programs we see that don’t have some aspect of credit counseling,’ said Lindson, who looks at people’s long term financial health and helps them develop assets to have a more stable future.
Understanding credit and credit scores is part of long-term financial health.
‘It is a big barrier,’ Lindson said. ‘Ironically, when you have lower income, you wind up paying more for things and it eats up more of your income and affects paying off debt.’
‘People don’t have bad credit scores because they’re bad people,’ she said. ‘They have bad credit scores because they don’t understand money. That can be fixed.’
Savvy Michigan
Most residents in Michigan cities, however, appear to be credit savvy.
Average credit scores for residents living in 83 Michigan cities are generally high, but there are a few exceptions.
The consumer credit website Wallethub ranked a sampling of 2,534 cities of varying sizes nationally by the average credit scores of the people who live in them.
In Michigan:
* Residents in eight cities had an average credit score in the excellent range, which is a score of 720 or higher, according to the credit website www.creditsesame.com.
* Residents in 63 cities had an average credit score in the good range, which is a score of 640 to 719.
* Residents in 12 cities had an average credit score in the fair range, which is a score of 550 to 639.
* In 17 Oakland County cities on the list, average credit scores in five cities were excellent, average scores in nine cities were good, and average scores in three cities were fair. Pontiac, the county seat, had the lowest average credit score at 588.75.
* All five Macomb County cities on the list had good average scores, ranging from 619.19 to 701.82.
* The average American household credit debt is $5,700.
* In all, 38.1 percent of all households carry some sort of credit card debt.
* Among the 50 states, Michigan residents rank 45th in average credit card debt at $5,079. Iowa is lowest at $4,734. Alaska is highest at $7,706.
* Nationally, the highest average credit score was 778.77 in The Villages in Florida. The lowest average score was 566.07 in Camden New Jersey, still in the fair range.
Building Credit Scores
Only you are responsible for your credit score, but building a good one takes a little knowledge.
That’s one point that Brian Newman tries to get across to his students at Macomb Community College, most of whom have zero credit scores.
Students with loans find them deferred until graduation before repayment begins. Many have little or no history of using credit cards or having loans.
‘If someone has a poor credit score it means something in their financial history led to it,’ said Newman, an accounting professor at MCC and a resident of Macomb County’s Washington Township. ‘That could be personal bankruptcy or repossession of a vehicle or something as simple as one or two late payments on a mortgage or other loan.’
Some people have never had debt.
‘I had one person who didn’t have a score who is in his thirties,’ said LaShawn Brown, Ph.D., a financial and home ownership educator at Michigan State University Extension in Macomb County. ‘He’s always lived with his parents and just never had a reason for credit.’
Now that he is considering home ownership, good credit is necessary.
However, Brown showed him an option that is similar to a credit card except the borrower pays in advance. With a secured loan or secured credit card, the borrower makes payments on the card. At the end of the term, the money is put into a savings account, minus some fees. What’s nice is that the payments are reported by the lender so they help to build up a credit history.
‘It’s great to be able to help people improve their financial situation, especially when they’re looking to buy a home,’ Brown said.
A credit score is a numerical expression of a person’s history or repaying debt on time over time.
Credit reports do not show income, bank accounts, race, gender, marital status, employment status, religion, political affiliation, medical history, criminal record, interest rates you pay, rewards accounts, most utility accounts and cell phone accounts unless in default, Payday, title loans and other nontraditional credit products unless in default, and accounts and public records that have aged off the report. A credit report also doesn’t reveal a spouse’s credit history but may show a spouse’s name if there are joint credit accounts.
Don’t know your credit score? It’s your right to know, said Newman.
‘Once a year you can get your credit score for free and it’s highly recommended that you do.’
The three primary bureaus of record are TransUnion, Equifax and Experian.
People should check their credit scores regularly just in case of errors or discrepancies.
‘It’s in your best interest to find out why it’s bad,’ Newman said.
This can be done by asking the credit bureau with the report in question for further details. That service is not usually free.
A second report will show what contributed to the credit score and whether it is accurate or not.