Spring is the best time to get rid of clutter from months past. While that typically means clearing out unused winter clothes and unwanted holiday gifts, one personal finance CEO says spring cleaning should extend to your credit, too.
Cynthia Chen is the founder and CEO of Kikoff, a credit building app. After years working in public finance, Chen founded Kikoff out of frustration with the existing credit solutions on the market.
“Working in consumer’s public finance allowed me to witness firsthand how many people got declined for loans and insurances because of poor credit,” Chen said. “One out of three American adults did not have a credit score above 600 — and life would be very expensive and difficult without a decent credit score.”
Chen and her team at Kikoff created an app that provides a full suite of credit building solutions to users who purchase a monthly subscription plan, with plans starting at $5 a month. Kikoff’s services include credit monitoring, debt negotiation, subscription management and more. Chen says Kikoff has helped over 2 million Americans build credit, cumulatively raising credit scores by almost 100 million points.
Courtesy of Kikoff
Courtesy of Kikoff The Kikoff app interface.
“We very often come across stories from users where they say, ‘oh, I’m so glad that I got a higher score and got a good credit card or got my auto loan approved,'” Chen said.
With tax day approaching, Kikoff is encouraging Americans to dive deeper and “spring-clean” their credit.
“This is the time of the year where people do [spring] cleaning, and also where people get their tax refunds, if you have a refund due,” Chen said. “It is a smart idea to use the tax refund to build a brighter future, including financial wellness by doing things like credit building.”
While combing through your credit may sound daunting, it doesn’t have to be.
How to “spring-clean” your credit
Chen advises to start by doing a full scan of your credit reports from Equifax, Experian, and TransUnion to see whether information is accurate and consistent, or if there are any accounts you don’t recognize. It’s not uncommon for an account that’s not yours to appear on your credit, usually due to sharing a name with someone.
“It had happened to me — I saw a credit card on my credit report that belonged to another person with the same name,” Chen said. “Thank God the person was not delinquent on the credit card. Otherwise, that person could have ruined my credit.”
After making sure everything checks out, look into and address any “problem” accounts like collections, Chen says.
“Try to find out whether the collection agency will be amenable to a settlement at a much smaller amount than what you were usually owed. They often are, because they buy your bad debts from your lenders at a deep discount. So you may want to use some money to settle some of the collections so that you have a much cleaner report.”
After tackling any marks on your credit that you can, Chen says to focus on building positive credit.
“Invest in something like rent reporting, if you are a renter, and then have that continuous positive payment history help improve your credit over time. That’s how I would do it,” she said.
Rent and bill reporting, which allows users to earn credit for the monthly rent and bills they would be paying anyway, is available through Kikoff and many other credit building apps.
Building good credit is beneficial for reasons other than raising your chances of loan approval. It’s also a great way to stand out when trying to appeal to a potential landlord, employer, or in Chen’s words, even a partner.
“Some people during dating, before they go into a deeper relationship, may ask the person they’re dating about their credit. Because even in a romantic relationship, people care about how financially responsible the other person is. Some of our customers mentioned that to us.”
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