Credit Building-Some Thoughts to Consider

Working to improve our credit score doesn’t necessarily mean opening a new line of credit and starting to make payments. One of the first steps on the journey to build your credit is knowing what is on your credit report. If you haven’t looked lately, you should check it out. You can visit www.annualcreditreport.com, and get copies of your report from all three bureaus. Beware of companies that offer “free credit reports” but require you to put in a credit card number prior to pulling your report. Often times, this enrolls you in a program that will charge your card monthly.

Also, before pulling your credit report, consider if it is safe for you to do so. Are you using a computer where your activity can be tracked? Is someone trying to locate you, who might have access to your report? Anybody who has your social security number and date of birth could potentially access your report. The address you enter to pull your credit report will be listed, and anyone who pulls your report will see your address. If you are concerned about the safety of pulling your report in anyway, please contact an advocate at ROW at stlrow@sbcglobal.net, or an advocate at the National Domestic Violence Hotline (1-800-799-SAFE), to talk through potential safety risks of pulling your report.

Once you have pulled your report, review it for any old or inaccurate information. Checking your name, date of birth and social security number is a good place to start. From there, you want to see if there are any collection accounts with a date of last activity (DLA) greater than 7 years, or an account paid as agreed older than 10 years, if there are, highlight them. Next see if there are any accounts you don’t recognize or didn’t authorize be opened, highlight those as well. Once you have completed these steps, mail a letter requesting that old items be removed, and disputing any accounts that are not yours. Taking these steps will increase your score without costing you more than your time, few sheets of paper, and postage.

Something else to consider when building your credit are alternative, or nontraditional lines of credit you might have. Do you pay for daycare, a cell phone, or utilities? Anything that you can show you paid on time for a minimum of 12 months is considered a positive line of credit. Ask your daycare provider, cell phone provider, or utility company for a credit reference letter identifying the number of months (12 or greater) that you have paid on time.

Finally, remember to try to pay bills on time, or at least prior to 30 days late, and keep records or receipts from bills you pay regularly and on time. Review your credit report a minimum of annually to dispute any old or inaccurate information, and avoid opening/closing several lines of credit at one time. Happy Credit Building!

You have your income tax refund, now what??

Now that you have your refund, what are you going to do with it? A lot of us have plans on how to spend that extra money before we even file our returns. Pay off debt, get some new clothes, take our kids to do something fun-the list goes on and on…

Go back and look at the vision you drew at the end of last year. If you didn’t draw a vision of what your life will look like in 5 years, take a few minutes draw one now. Not just your financial life, but your whole life, your job, your spirituality, your family, your home, etc. Now, think about how the money in your refund can start to help you move towards some of those goals. For some of us, it might be starting a savings fund for school, others of us might choose to pull our credit report and pay off debt, or pay back a family member we owe money to. If you don’t know how you want spend the money, put it in a savings account or a CD until you know how you want to make that money work for you!

Also, I encourage you to think about starting a small emergency savings account. Having an emergency account no matter how big or small can help out when unexpected medical bills, car repairs, or other surprise expenses come up. Another idea: take some money to do something fun for yourself and your children-you deserve it! Next time, we’ll talk about credit building!

Tax Time!

Refund Anticipation Loans (RALs) are short-term loans offered through tax-preparation agencies as a means for consumers to receive their tax refunds early. Rather than waiting to receive their tax refunds, consumers receive money up front by paying a fee ($50-100), and the tax refunds go towards repayment of the loan.

This spring, H&R Block announced that they will no longer be offering RALs. This comes because the IRS announced that they will no longer provide tax preparation centers with a debt indicator (essentially a credit check) which the tax prep centers use to determine the consumer’s risk level. Instead, H&R Block plans to offer Refund Anticipation Checks (RACs). RACs are being used as a way for those without bank accounts to receive tax refunds when H&R Block files your return electronically. Rather than receiving their refund in the mail, consumers receive the refund (minus any fees), via one of three ways: a prepaid Mastercard, direct deposit, or via check (for an additional fee).

The important thing to note here is the amount of time it takes to receive a refund. With the RAL program, consumers can access their money faster because of the loan, although they are paying high fees for this service. With the RAC program, consumers still must wait 8-15 days to receive their refund, in addition to paying a fee. A consumer can electronically file taxes on their own, or through a free tax preparation site, and receive the refund in the same amount of time without paying any fees. For those who do not have access to a bank account, it may be less expensive to pay a check-cashing fee than to pay preparation and processing fees that may be charged through one of these services. Adapted from redtape.msnbc.com

Many communities offer sites for free tax preparation. If you are in the St. Louis Metro Area, please visit the link below to see if you qualify, and to find a date and time that works for you to file your taxes!

http://www.gecc.us/15302.html

Nationally:

http://www.cbpp.org/eitc-partnership/state-links.htm

After filing your taxes, take some time to plan what you might do with your refund. Think about your emergency fund, money you may owe to creditors or family members, and doing something fun for yourself and your children. We can use our refunds to work towards the vision that we have for our future, and to do a little something nice for ourselves now!

A few things to remember as 2010 winds down

As advocates, the end of the year is often a very busy time. We are wrapping up groups, having individual appointments, planning for some down time, and also planning for 2011. As we are approaching the beginning of a new year, we often reflect back on our experiences, challenges, and successes. I find that most often, people reflect on challenges or mistakes more than successes. So, just as you would with a survivor sitting beside you, I challenge each of you to think of something you have done in this last year that was a success, and while you're at it, think of a financial success as well! This can range from purchasing a car, to getting our bills paid, to getting to work and supporting survivors every day.

And as you begin to think about 2011, think about your (yes, advocates, take some time for yourselves!) 5 year plan, and what steps can move you towards those goals. If you haven't drawn your five year vision in awhile, take some time to do that--think about your life in 5 years, all aspects (financial, family, spiritual, education, etc), and draw a picture of what that will look like. Think about one thing that you can change that will move you towards those goals.

Finally, don't forget to start watching for information to pass on to survivors about applying for the Earned Income Tax Credit (EITC) and free tax preparation sites in your area. This can save lots of money, and put the whole refund in survivors' (and your) pocket! In January, we will have more information about EITC and tax preparation, so hold on to those W-2s, and watch for the info to come!

Reflections from New Facilitators

At ROW we often have social work practicum students working in our REAP program. As the summer semester comes to a close, we asked our current students to share with you their reflections on learning to facilitate REAP. Here they are:

As new social work practicum students at Redevelopment Opportunities for Women (ROW), we have had the privilege of becoming ROW’s newest REAP facilitators in St. Louis. Because we are completing a two semester practicum at ROW, we were able to participate in the extensive training required for REAP facilitation. Although we are still learning, we have greatly benefited from the experiences and training we have thus far received. Even though we hope to have increased financial education and awareness in our sessions, we cannot fully express our gratitude for the understanding we gained from the women served.

Throughout the course of our first semester at ROW, we prepared to facilitate by shadowing current REAP facilitators, attending training workshops, and studying the facilitators’ curriculum. During this time, we realized how little we understood about certain financial issues such as credit and how difficult financial systems are to navigate without informed support. We were also able to recognize our own privilege in easily accessing said informed support, while realizing how easily incorrect information circulates through any community.

Although we were both apprehensive about facilitating our first classes, we had the support of ROW staff and therefore felt confident about our first experiences. Discussions of power and control as well as privilege and oppression proved to be especially powerful, as we witnessed women begin to understand how these structures played a large role in their individual lives. From the first few sessions, we found ourselves surprised with participants’ consistent involvement in the power line activity, an interactive exercise in which women explore privilege and oppression through race, gender, sexual orientation, age and so on. We find this activity breaks the ice and fosters a more close-knit environment.

Throughout the course, participants, with varying degrees of financial knowledge, explore challenges such as thinking about Cost of Living Plans instead of budgets, the complicated system of credit as well as banking and investing. For instance, while one woman may know a great deal about predatory lending, she may know very little about banking institutions. REAP is a unique program because it combines safety planning for women who have experienced intimate partner violence with financial education. The necessity of this type of program becomes increasingly apparent in every class through participants’ questions and concerns.

Each class poses a different set of challenges for us as new facilitators. Some are simple logistical problems such as lack of chalk or white boards and other supplies at different sites. However, the diverse range of sites also changes the dynamics of the group and create broader challenges. For example, ROW, shelters and other outreach sites each have unique environments, which prompt facilitators to tailor their classes accordingly. Other challenges include correcting prejudicial language without judgment as well as redirecting conversations back to the topic at hand.

All in all, this experience has been and continues to be both insightful and humbling. As previously stated, we have learned a great deal from the women participating in our classes. For this we are especially grateful.

Banking Access

Access to safe and secure banking services has been seen as a critical part of individual financial freedom in America for generations. It allows safe keeping of liquid assets, confers interest on accounts, and is a critical step in accessing credit markets. With the rise of electronic banking, a new set of privileges such as having access to direct deposit of paychecks, on-line or automatic bill pay, and the ability to closely monitor account activity, make banking services that much more integral to navigating American society. Yet many women coming out of domestic violence situations may be “frozen out” of banking services because of previous negative banking relationships. Most banks in America participate in ChexSystems., which describes itself on its website as a network that “is comprised of member Financial Institutions that regularly contribute information on mishandled checking and savings accounts to a central location. ChexSystems shares this information among member institutions to help them assess the risk of opening new accounts.” Because information about accounts is accessible not just to an individual bank, but to all banks, the fact than a woman’s partner might have destroyed her ability to get an account at one bank through fraudulent means does not just affect her relationship with that one bank, but may prevent her from getting access to banking services at any financial institution.

As advocates, we can take steps to help women regain access to banking services. Find out if your community has a program to help individuals “rehabilitate” their bank history, such as Missouri’s Get Checking program. Reach out to local banks or credit unions to learn their policies, as some local institutions may be able to provide limited banking services to participants with a negative ChexSystems report. These institutions may be able to offer accounts without a debit card or with slightly higher minimum deposits.

If you are working with a woman who is unsure about her banking history, she can access her ChexSystems report once a year for free. To see a ChexSystems report, go to www.chexhelp.com, or call 1-800-428-9623.

Identifying Economic Abuse

Survivors of intimate partner violence may experience many forms of abuse, including emotional, physical, and sexual violence. At ROW we address another form of domestic violence that doesn’t get as much attention: economic abuse. Economic abuse may play out in a number of ways, and it often overlaps with other forms of abuse. For many women, finances can impact their decisions about staying, leaving, or returning to a partner, because they may experience multiple economic losses as a result of leaving a relationship. They may lose any of the following: their job, housing, transportation, or their main source of income, and they may experience the loss or damage of important possessions. For domestic violence advocates, being aware of the many forms that economic abuse can take is critical to supporting and standing with survivors.

Some forms of economic abuse include:

Controlling the financial resources (checkbook, income, gas money, etc.)

Destroying credit (Taking out lines of credit in her name, letting her car become repossessed, paying bills late to destroy her credit score)

Taking her money (stealing cash, checks, or money from the ATM)

Making her ask for money or giving her an allowance

Controlling access to financial information (not telling her about life insurance policies, not allowing her to have access to the checkbook or account information)

Gambling or spending away life savings

Demanding details of how money was pent

Not allowing her name to be on accounts

Not letting her talk to others about money

Devaluing her financial contribution

Expecting her to “behave” a certain way because he makes more money than her

Preventing her from having or keeping a job; or destroying homework for school