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Deborah McNaughton never thought God would lead her into helping people with their finances. In 1984, she and her husband, Hal, were running a successful real estate business in Southern California when she noticed many of their clients were having difficulty getting loans because of bad credit reports. So Deborah decided to help. After dissecting different laws and aspects of credit, she founded Professional Credit Counselors, an organization to educate consumers and businesses on how to manage finances.
Deborah's since authored several books on money, including The Insider's Guide to Managing Your Credit, All About Credit (both Dearborn), and Everything You Need to Know About Credit (Thomas Nelson), as well as Yes You Can (to be published in January 2001 by Archer Ellison Publishers). She's a frequent radio talk show guest, writes a column for www.onmoney.com, and leads financial and faith-based self-esteem seminars. Here's what she had to say to TCW.
Deborah, you talk a lot about managing credit. But shouldn't a Christian keep as debt-free as possible?
The Bible shares good advice on how we should spend our money. Obviously, that's something we need to follow. And a lot of Christian leaders say you have to be debt-free. In today's society you can be debt-free, but you have to establish good credit. If you don't, you can't purchase a home or a car. The fact is, most people don't walk around with a lot of cash. Unfortunately, people have the misconception that credit and debt go hand-in-hand. That's not necessarily true.
Should a married woman establish her own credit?
A married woman should always get credit in her own name. You may think you have credit because you're the one who writes the checks, or you have a joint account with your husband, or you use a credit card that has your husband's name on it and you're authorized to use it. But if something happens to your husband, when you go to use credit, it will come up as "No record found." You thought you had credit—but you didn't.
Also if there's ever a financial problem with your husband's credit or your joint accounts, if you keep your card in good standing, that may help you reestablish your credit.
How can a woman establish credit?
First, get a secured credit card from your bank by putting down a deposit. Every month charge a small amount such as $25, then pay $25 off. Once you have that established, you can move to an unsecured card that doesn't require a deposit.
Then, get two or three cards, charge small amounts, and pay them off every month so you can establish a positive payment pattern on your credit report.
Is it really better to have several credit cards?
It's better to have two credit cards—but not a department store or gas card, because those cards have very high interest. Get a Visa or a MasterCard with a low interest rate. Just make sure when you get the cards, you read the fine print on those disclosures so you'll know how the interest is charged. Some interest is charged the minute you make a purchase; others have a grace period of maybe 25 days.
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