I was speaking about ways to save money with a coworker who mentioned that she wanted to buy a house soon. She was worried about the rate she would get because she knew her credit score was bad .

This person, I’ll call her S, said she had a lot of unpaid medical bills and phone bills from her past. There were also a few bills that had been late in the past but then she had settled with the company so she hoped that had already dropped off her credit report.

S told me she was thinking of hiring a credit repair company to clean up her credit report because she had heard they could take items off. This is the point where I had to stop her and put on my Personal Finance hat. In the short time that I have been blogging about my personal finances I think I have learned a few things that I could share with someone.

Pull Your Credit Report

The first thing I told her was that she needed to save her money and not pay someone to do what she could do herself. I showed her how to go to www.annualcreditreport.com which is the ONLY site to give you your credit reports for free.

My advice to her was to pull one report right now and then pull the other two in four month increments, since you can only get one free credit report from each bureau each year.

S decided to get two of the reports on the same day and then she would get the other one in four months so she could see what changes had been made. She was really surprised to see that there were items that were still showing up on her credit report after three years. I told her that it took about seven years for items to drop off the credit report even when they have been paid in full and closed off .

I also told her that just because she called the company and asked for the account to be closed it could still be showing up on her credit report because some companies take a few months before reporting to the credit bureaus. They usually do this because they are hoping that you will reopen the accounts in most cases.

Pay Bills on Time

My friend was not paying all of her bills on time for whatever reason. I told her that one thing the companies looked at was whether or not you are paying on time. She sometimes paid more than the minimum on the accounts, especially if they were paid late, because she was trying to cover the late fees and interest.

I told her the first thing she needed to do was to determine the minimum needed for each monthly bill. If she could find enough money to cover the minimum payment on each bill then she could pay all the bills on time, instead of paying extra on some but paying them late. In my opinion, it would be much better for my friend to pay the minimum on all her bills and have them paid on time than to show sporadic payments and late payments on some accounts if she is trying to boost her credit score.

Pay More Than The Minimum

If you can pay more than the minimum then you are doing much better when it comes to raising your credit score. I did not go into detail with her about how much she could afford to pay each month but I told her to think about it. Paying above the minimum payment (on time!!!) will go towards her paying less in interest and fees so that she can take down the outstanding balances faster.

She said she had not thought about these things before and I told her that I had been in a similar mindset before I started blogging and reading other Personal Finance Blogs and really taking note of how I was managing my money.

These are just the first few things that we spoke about while at work. I will check up with her again to see how she is doing and to see if she wants any more of my help.

Do you speak to coworkers and friends about managing money? How does that go? Do you reveal that you blog too?