So Overjoyed CS, LLC
So Overjoyed CS, LLC

Credit Facts and Tips

Money Management


If you are like many Americans, you may live paycheck to paycheck, which makes it difficult to stay ahead of those bills that seem to keep piling up. It's very important to save for your future. If possible, set aside a percentage of your monthly income and put it in a savings account when configuring your budget. The hard part is, pretending that money doesn't exist.

It's recommended that people divide their spending plan into separate categories with necessities taking top priority. Necessities would include housing, utilities, medical insurance, food, child care, secured loans, car payments, insurance and co-signed loans. Then comes the unsecured debt, miscellaneous and entertainment expenses, plus any other applicable categories.

Plug in your income and the amount of money shuttled into each category every month. You may see areas where you can trim some fat. For instance, you could save hundreds of dollars a year by requesting lower interest rates on credit cards or shopping around for car insurance. Unnecessary drains on funds will become apparent and you have the foundation in place to take action.

Ideally everyone would have plenty of money left over at the end of the month. But if necessities leave you tapped out by the 20th of the month, it may be time to take some drastic steps. For instance, getting a roommate or finding a second job.

Curtailing credit card usage, especially on impulse, might be the best behavioral change you can make, particularly if you already have a large amount of credit card debt.

The most important thing we can stress to you is to be organized. It will pay off in the long run. Use a filing cabinet or a simple box to keep financial documents in order. Bills should be kept handy in a designated box or basket. The key is to set up a system that works for you.

Credit Reporting and FICO scores


 There are three major credit reporting agencies in the United States. They are Experian, TransUnion and Equifax. Everyone is entitled to a free copy of their three credit reports, from each of the credit reporting agencies every 12 months under federal law. Some people tend to think that each credit report will have the same exact information on them. That's not the case at all. Each credit report will have different information because it's a voluntary system, and creditors supply credit information to whichever agency they want; if any at all. The report is easier to read because it won't list the creditor's member numbers and other information relevant to only the lender. A lender's report also will lack a complete list of every company that's pulled your credit information for promotional purposes, like pre-approved credit card offers.


A FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders use borrowers' FICO scores along with other details on borrowers' credit reports to assess credit risk and determine whether to extend credit. Your FICO Scores consider both positive and negative information in your credit report.Scores are calculated from many different pieces of credit data in your credit report. This data is grouped into five categories. 

35% is Payment History
30% is Amounts Owed
15% is Length of Credit History
10% is New Credit
10% is Credit Mix


These percentages are based on the importance of the five categories for the general population. For particular groups. For example: people who have not been using credit long—the relative importance of these categories may be different.

Your credit score is calculated from your credit report. However, lenders look at many things when making a credit decision such as your income, how long you have worked at your present job and the kind of credit you are requesting. Late payments will lower your FICO Scores, but establishing or re-establishing a good track record of making payments on time will raise your score.




Good vs. Bad Debt


Debt for many people today, is simply a fact of life. It's the way they pay for just about everything from big-ticket items like homes and cars to daily purchases like gasoline and gum. At its most basic definition, debt is simply an amount of money borrowed by one party from another. Under this definition, debt sounds neither good nor bad. A closer look at the subject provides a more sophisticated way of both viewing indebtedness.


-Good Debt-

We've all heard that saying, "it takes money to make money" than good debt. Good debt helps you generate income and increases your net worth. Four notable examples of good debt include:


1. Technical or College Education
Education has long been synonymous with success. In general, the more education an individual has, the greater the person's earning potential. Education also has a positive correlation with the ability to find employment opportunities. Better educated workers are more likely to be employed in good-paying jobs, and tend to have an easier time finding new opportunities should the need arise. An investment in a technical or college degree is likely to pay for itself within just a few years of the newly educated worker entering the workforce. Over the course of a lifetime, educated workers are likely to rack up a return on investment measuring in the hundreds of thousands of dollars.

2. Small Business Ownership
Making money is the whole point to starting a small business. Earning income is a primary benefit of entrepreneurship, with being your own boss also a positive result of the endeavor. Not only can you avoid reliance on a third-party to hire you and give you a paycheck, but your earnings potential can be directly improved by your willingness to work hard. With a bit luck, you can turn your drive and ambition into a self-sustaining enterprise and perhaps down the line, an initial public offering (IPO) that results in major wealth. 


3. Real Estate
There are a variety of ways to make money in real estate. On the residential front, the simplest strategy often involves buying a house and living in it for a few decades before selling it a profit. Residential real estate can also be used to generate income, by taking in a boarder or renting out the entire residence. Commercial real estate can also be an excellent source of cash flow and capital gains for investors. 


4. Investing
Short-term investing provides an opportunity to generate income, and long-term investing may be the best opportunity most people have to generate wealth. The wide variety of available investments from traditional stocks and bonds to alternatives investments, commodities, futures and precious metals (just to name a few) provides an array of choices for just about every need and every risk tolerance.

While good debt may seem like a great idea, it is important to realize that even the best ideas don't always work out as intended.


-Bad Debt-

While even "good debt" can have a downside, certain debts are downright bad. Items that fit into this category include all debts incurred to purchase depreciating assets. In other words, "if it won't go up in value or generate income, you shouldn't go into debt to buy it." Some particularly notable items related to bad debt include:


1. Cars/Vehicles

New cars, in particular, cost a lot of money. While you may need a vehicle to get yourself to work and to run the errands that make up everyday life, paying interest on a car is simply a waste of money. By the time you leave the car lot, the vehicle is already worth less than it was when you bought it.


2. Clothes, Consumables and Other Goods and Services
It's often said that clothes are worth less than half of what consumers pay to purchase them. If you look around a used clothing store, you'll see that "half" is being generous. In addition to clothing, vacations, fast food, groceries and gasoline, these are all items commonly bought with borrowed money. Every penny spent in interest on these items is money that could have been used more wisely elsewhere.

3. Credit Cards
Credit cards are one of the worst forms of bad debt. The interest rates charged are often significantly higher than the rates on consumer loans and the payment schedules are arranged to maximize costs for the consumer. Keeping a balance on a credit card is rarely a good idea.

There is certainly an argument to be made that no debt is good debt. Unfortunately, few people can afford to pay cash for everything they purchase. With that in mind, a motto of "everything in moderation" is the right approach to take where debt is concerned. Remember, even "good" debt has a potentially bad downside.

Our Mission


We offer significant credit consulting expertise to our clients. We offer management consultant services to a diverse range of clients in various industries. Whether you require short-term or long-term measures, our expert advice will help you navigate safely into your financial future. 

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