Christopher Hensley:
Good morning, everybody. This is Chris Hensley and I'm your host of Money Matters presented by the Houston Midtown Chapter of the Society for Financial Awareness. And you're listening to KPFT Houston on the HD3 online digital radio And we've got a great show for you today with lots of information, so we're going to go ahead and get started here. We're going to talk about, for new listeners, people who haven't heard the show before, we are going to introduce you to SOFA, tell you about what we are, who we are, what we do. And then we're going to take a moment to get an update on a payday lending bill that was running through the state recently and give you an update. It's something that SOFA has followed. I want to let you know what's going on with that, what happened with that. And then the bulk of the show today really is to give you an idea of what it's like to have SOFA come out and do a talk. At the beginning of the month, we were out at Baylor College of Medicine during their financial fitness week, really, and came out and did several different talks and topics. Today, we're going to give you kind of a sneak peek of one of the talks that we did called You and Your Credit, and we will also play for you some of the live question and answers that we got at the end of one of the talks, share those with you. And short of actually getting you out to one of our workshops or seminars, That's a really good way to give you an idea of what the content, the topics, the ideas that we go over are. So we'll do that. And at the very end of the show, we're going to share with you an events calendar, things that SOFA will be doing here in the next coming months, as well as our show, Money Matters, what kind of guests do we have coming on in the future. So with that, let's go ahead and get started here. SOFA is a 501c3. Nonprofit Educational Speakers Bureau. So our mission is to fight financial illiteracy. When we do that, we go out to different companies, different groups, different organizations, anywhere people already congregate and provide financial education seminars as well as health and wellness workshops. If this is something that you are interested in, you can find us on the web at www.HoustonMidtownSofa.org to find out more information about the organization. Now, how do we do this? Typically, when we go out to these groups and do our educational seminars, it's most of the time, I'd say about 90% of the time, they're going to be work site, lunch and learn, brown bag type seminars. So this might be something that we would come out to your employer at lunchtime. It may be later on in the day. It really just depends on what's open at the company, the organization. Not only do we work with companies, but we also work with professional associations. So if you are an event planner, if you are a program coordinator, if you're a president of an association and you are looking to have speakers out, We can help you fulfill that by having one of our SOFA members come out and do a talk in front of your group. If you are an executive pastor at a church or a synagogue, a mosque, anywhere where you have events that need to be filled, that is something that SOFA can help you with. How do we do this? This is going to be not just one speaker. We come out and we talk about all different types of topics. So I'm a financial advisor. I would come out and talk about investments, retirement, but we also have topics that are a little bit non-traditional from what you would have from say the retirement guy that comes out and talks. We're going to talk about cash flow management. We're going to talk about budgeting. One of the talks that you're going to hear a little bit more about later on in the show is you and your credit, so we talk about credit a lot. It's a very popular topic. first-time homebuyers. We just got finished with April. That was tax season, so if you wanted somebody to come out and talk about taxes, we would have a CPA come out. If you wanted somebody to come out and talk about wills and estate planning, then that would be an attorney. And so all of this is done pro bono. It's all through volunteers and members of SOFA, so there's no charge, no fee for that. And if you are interested in this, what we would ask you to do is get us in touch with your human resources manager at your work. Let them know that you've heard about the organization and you would like to have these classes out at that company. And then just let us know, and we'll get in contact with them. And typically, that's how it is done. events that are not worksite and those are open to the public so you can watch our website as well. When those come up, you can attend those at no charge and no cost. And with that, I'm going to transition over into the topic that I had mentioned earlier about payday lending, the payday lending bill. This is a topic that's really important. As these shows roll forward, you're going to hear maybe one, two, possibly many around predatory lending because it's an important issue here in Texas, but not only here in Texas, specifically in Houston. This is something that affects us on a day-to-day, real level. There was an article that was back in March. This was March 28th. It was from the Texas Tribune. And I'm going to read that to you. I'm going to share that with you because it really sums up this bill that was being passed around the house. And then I'll update you as to where it is now. It's the Payday Lending Bill in Trouble. This was by Chris Hooks. And it said, efforts to increase the regulation of payday lenders in Texas could be in trouble as consumer groups fight for stricter lending rules than those being proposed in legislation. The Senate Bill 1247 was put forth by State Senator John Corona, and it was to establish new regulatory guidelines for lenders that offer payday and auto title loans. Short-term lenders which offer small loans with high interest rates and expensive fees have long been the subject of an ire for critics who say that the services target low-income borrowers and charge exorbitant prices. But the industry defenders say that the loans allow low-income borrowers financial flexibility. So among other things, Corona's proposal would limit the maximum size of the loans to a percentage of the borrower's monthly income and cap the number of times a borrower could roll over these outstanding loans. Now, the initial version of that bill elicited measures that were praised by consumer groups, but that support has eroded amid concerns that the bill's consumer protections have been watered down and that the key provisions have been replaced by language that favored industry trade groups. It goes on to say, there's a quote here, it says, it's been pretty touch and go for the past couple of weeks, said Don Baylor, a senior policy analyst at the Center for Public Policy Priorities, which is an Austin-based liberal think tank, who is involved in negotiations to reinstate consumer protections in this measure. The last version that was in the committee has caused a lot of consumer groups to pull back, Baylor said, and a lot of the industry actually testified in support of the bill. The article goes on to say that there's a group out there called the Consumer Service Alliance of Texas. It's a trade organization and it represents short-term lenders, declined to comment for the story. But CSAT has unfailingly supported efforts during the year's legislative sessions to create a safety net for those borrowers who unfortunately fall chronically behind in their ability to repay their debts. In 2011, a different version of this bill got in front of legislators that increased state oversight of payday and auto title lenders requiring the business to be licensed and to clearly display a list of fees. Further, now it goes down a little bit further in the article, it says, last week a new version of the bill appeared that consumer advocates argue weakened many of the consumer protections. In the original bill, a payday loan taken on within five days of a previous loan was considered refinancing, a rule intended to prevent borrowers from rolling over their loans forever, paying more fees and interest. In the original bill, the size of the payday loans were also capped at 15% of monthly income for those making less than $28,000 a year and 20% for those making more. In the new version of the bill, those limits are set at 30% and 40% respectively. Now here's a quote that kind of sums it up. When I was reading it, I thought this was pretty astute. Baylor said that the new muscle limit simply explicitly allow current practices. It's akin to putting a 75 mile per hour speed limit on a residential road. He said, you can say it's a limit, but it's not going to make anybody any safer. In addition to that, now this complicates it a little bit further, the new state regulations would trump city ordinances that regulate short-term lending. Since 2011, several Texas cities including Austin, Dallas, San Antonio, and El Paso have passed regulations that are more restrictive than the current version of State Bill 1247. If the bill passes, restrictions on payday lending would be relaxed in such areas. For example, San Antonio City Councilman Diego Bernal testified against the bill on March 19th. He told the Senate Business and Commerce Committee that the bill would significantly weaken the city's regulatory structure. So what's interesting about that is that you've had an attempt to put a bill out in 2011 that brought some things where they had to be licensed to be able to do this. But then we had another attempt here in 2013. You've seen cities like San Antonio, Dallas, El Paso passed their own regulations, their own city ordinances that made it more of a protective environment for consumers from these predatory lenders. But if this bill passed the new version of it, you would see that the bill would actually water down some of the content that was in the city. backed regulations and so now I went and I looked at the most recent information about this. On May 26 there was an article in the Houston Chronicle that said that this bill did die in the House and as it moved towards its final weeks the bill died. So in some extent that's A positive thing because the cities that have gone out and put these regulations in place, they will be able to honor those without having the Texas bill superseded. But for Texans as general, before we're able to really have a new discussion on this bill, it will be two years from now. It's 2013, 14, 15. By 2015, we may look at something like that. So I wanted to keep you up to date with that and let you know we will have shows around this topic of predatory lending because it is really significant in Houston. You see these little payday loan shops pop up all over the city, specifically targeting the more low-income neighborhoods. I'm going to switch gears a little bit and move over to the credit talk that I mentioned earlier that we did out at Baylor College of Medicine. And Baylor does a really good job of, I've worked with organizations, companies, universities who have done financial education events. Baylor doesn't just do one event, they do an entire week. And so they invited in SOFA, they invited in the Social Security Department, they invited in somebody from Medicare, and then the companies that manage their retirement plans. And they had just a slew of interest. The university has over 8,000 employees, students, faculty members there, so it's a very large group that we work with. Went out and we did a couple different talks, getting fiscally fit, we did you and your credit, and we did one called getting your financial house in order. Each of them are in different topics. The one we're going to talk about today is you and your credit. And just to kind of set it up for you, usually when I go out and do this talk, I share a story with the members of the audience who are listening to the seminar. And it's how I got started with the credit portion of it. I'm a financial advisor so when I go out for SOFA, I talk about retirement, investments, that sort of thing, financial literacy, getting financially fit. But I also go out and I talk about credit. Before I was a financial advisor, I was a counselor and a trainer with Money Management International, which is a fancy way of saying what used to be Consumer Credit Counselor Southwest, and what I found when I went out and did those When we counseled people who had credit issues, it wasn't just one income class. It went from blue collar, white collar. You would see people who were doctors, attorneys, who had just as many credit issues as people that you would traditionally think would have credit issues like low income. What I've come to find out is that whatever the income level is, These people would spend on credit cards and overspend and their habits would catch up to their lifestyle. So debt is a very significant and important issue to everybody because it crosses all sides of the spectrum as far as income and class. How I got exposed to it at an early age was right out of high school. I had been working. I was excited about moving out of my house. Saved up money for a deposit. Went one weekend to an apartment complex to get approved for my first apartment. And it was on the weekend, so I filled out an application. The manager was not going to be back in until Monday, so I wouldn't really have an answer until they got there on Monday. Well, I was all weekend very excited. I got a phone call on Monday morning from the apartment manager, and they declined my application. They told me the reason that they did not approve me for the apartment was that I had broken a lease in the past and had not paid for the rent. Well, that sounded funny because the date that they gave me, I would have been 12 years old. And so I thought about it for a moment and I asked them to cross-reference my date of birth and cross-reference my social security number to make sure that the person that they were talking about was the right Christopher Hensley. Well, it turns out that it was the wrong Christopher Hensley. They were able to verify that information and I was approved. Now, that would not be the only time that I would run into this other Christopher Hensley who did not pay his bills. As I went and purchased a car, as I went and bought a home, Each time I went for something like that, I would have them pull my credit and this person apparently did not pay their student loans and so that would come up on my credit. Luckily, I knew in advance to let them know, point them in the right direction of how to get that corrected. But there are many, many errors like that when you're dealing with your credit. And that's one of the things that we talk about when we do our talk on you and your credit. I'm going to go ahead and start some live coverage of what we did out there and some of the questions and the answers. So let's go ahead and listen in on that now.

SPEAKER_05:
I have my purse stolen. It was probably about 10 years ago, but in my purse at the time I was still carrying my social security card, but I also had my two sons. When should I start checking? They're right now 15 and 12, but should I go and maybe try and pull a credit report under their social security card numbers at this point?

Christopher Hensley:
It wouldn't hurt if that's really a concern for you, if their social security cards were in there. That's actually prime for people who do this. That's kind of the prime suspect they're looking for. There were reports, Trader's Village that's here in Houston, they were selling social security cards right there and there were several cases of fraud outside of Texas that came out of that flea market. I would definitely do that.

SPEAKER_05:
That was one of the things. I did much like what your mom did. I did my own investigative. And they had pictures of the people that actually used my checks and stuff, but they weren't able to go for them. But three years later, one thing that they did add when I filed the police report was they told me to go get a brand new driver's license and request a new driver's license number so that they could link anything that was presented with my old ID as part of that theft. When I went to go get the license, they fought me on it, but I told them no. The police told me to get a new license number so they could track from what point in time if that ID had been used. It was four years later that I got a call from a car dealership where a woman had presented my old license that had been stolen and she wanted to use it for a test drive. And I told them no. I said that's not me. This is what happened. And they said that the woman left as they were making the phone increase because they had actually called the police on her.

Christopher Hensley:
So as soon as they started dialing the phone she took off. I think in that movie Fargo they are flipping out as they are calling the police there.

SPEAKER_05:
Wow. So that was another tip that they had given me.

Christopher Hensley:
Did you have any experience with when you do report something like that on your credit report that sometimes they'll put the fraud alert on there and that can be a pain in the, you know what, as well.

SPEAKER_05:
It was.

Christopher Hensley:
If you're trying to get something legitimate.

SPEAKER_05:
Yeah, they put it on for a period of one year and so during that period of time I did have some inquiries and things that we didn't have a whole lot of things that we were going out and doing so it didn't create too much of a problem for us. But I could see where that would be.

Christopher Hensley:
If you were in that period trying to go out and get a car or some kind of financing or something that's when you see it come up and you have to explain each and every time. Thank you. Thank you for sharing. We have a question on the credit report. Yes. And your name?

SPEAKER_00:
My name is Gloria. I recently just graduated college and I have that hanging over my head from school loans. And I want to know if that hurts me as far as having that much open debt. Or as long as I guess I make payments on it, does that really affect my credit score? For instance, if I'm going to go buy a new car, are they looking at, okay, you have $30,000 in school loans.

Christopher Hensley:
Is it going to hurt me? So they look at your debt ratio, debt to income ratio, and each lender, each underwriter is going to have a different set of criteria as to how much of a debt load you can have. They want to make sure that you can afford the payment that they approve for you. Let me tell you this, because I've worked with several Baylor College of Medicine people and several people in health services. You're not alone. Most people in the health industry, and attorneys as well, when they get out of school they start the world with a debt load. It's something that is scary, but one of the good things is that since you've made that investment in your education, usually your earning potential It's going to be higher than most people who start out into the world with that. It can be scary. Attorneys are the same way. Doctors, you go through all this school and then you've got this student loan that's just overhanging there. Typically, this industry is upwardly moving. You've got a better earning potential than some other.

SPEAKER_04:
Let's assume that hypothetically you don't have a house note, don't have car notes, don't have anything notes. You basically are running off your own income on anybody, anything. How does that affect a credit score?

Christopher Hensley:
So in general, that's a great place to be. Most people can't tell you that. Most people can't sit down and say, I don't have any credit, anything like that. But when it comes up is when you do go to get a line of credit or a car loan or something like that, typically they're going to want to see a Often, they're going to want to see some kind of credit history established. I'm a big fan of trying to just get off the grid altogether. If you can pay down those debts, that's the best thing to do. I would recommend keeping an emergency credit card.

SPEAKER_04:
I used to say, if you're traveling, if you ever go to a hotel. Let's assume that you use credit cards. for buying everything, but you always pay them off. Right, right.

Christopher Hensley:
That counts. If you have a credit card that you're paying off on a monthly basis and you're not carrying a balance on it, what they're looking at is when you started that credit card and that there's a history there as long as it's an open... Just because you pay off stuff doesn't hurt.

SPEAKER_04:
As long as you can say that it started here and it ended here.

Christopher Hensley:
Right. I guess there's two.

SPEAKER_04:
I mean, does stuff roll off of the like off your numbers? Let's say let's say you had a credit card and you've been using it and you quit using it or you paid it off or whatever. And then for four or five years, it had no activity on it. Does it roll off or does it stay there as an

Christopher Hensley:
Did you close it? No, it's not closed. It's just there and you're not using it. Two things that come into mind there are the age of the account. So if you open the account, then that's a positive thing because it's still showing a history with the credit card. One negative thing is often when you go to get a car loan, they will look at your your approved credit line with that credit card, and they say, well, worst case scenario, what if this guy goes and charges up the credit card? He's been approved for $30,000 on this credit card. Sometimes an underwriter will use that in the decision-making process. Not all the time, but sometimes they'll do that. In that situation, you might want to edge. If you still have it open, you might want to edge the credit limit down.

SPEAKER_04:
Yeah, because you said you only keep 30 percent. Right. So if you edge it down and you do use it.

Christopher Hensley:
Well, now you're it's one of those Murphy's laws. So if something happens and you want to use it for an emergency, it's kind of like you have to make a decision one way or the other. But that's a that's a good question. Yeah. What else? What other questions?

SPEAKER_00:
It's about school loans. If you defer payment on that and you've contacted your lender, does that negatively impact your credit, would you know?

Christopher Hensley:
No. If you've deferred it for a legitimate reason and you've contacted the creditor for the student loans, it will say that it's deferred, but that's a legitimate, it's not something where you just stop making payments on it. Typically that's going to be either you're still in school for There's a financial situation with a certain amount of criteria that they give you. If you meet that criteria, they'll let you defer or maybe even make smaller payments on it. But it's something that you've contacted the creditor and worked that out. That's where we get in trouble a lot is when we don't contact the creditors and make the arrangements. That's when you see people falling behind and stuff like that. But if you contact them, it never hurts to ask. A lot of times they can they can do a lot more than you think as far as working with you to get caught up.

SPEAKER_00:
I don't know.

SPEAKER_04:
Yes. Yes. Let's assume you had purchased something. Yes. And it was purchased in to, you know, like husband wife thing. Yes. And then you refinanced. And when they refinanced that, they put it in. One name. All right. And then that person dies. And this is an item that could be turned back over, say, come get it. I don't want it. Does that hurt the other person that isn't on it anymore? Yeah, because they were on it jointly.

Christopher Hensley:
Right, right. Not if it's been refinanced. If it's been refinanced and the note has been issued in the other person's name, then if they pass away, then that goes into probate or it goes into whatever their estate is and it's just that sole person's name. If you've gone through that process of having it refinanced where your name is no longer on it. Yeah, there's only one name on it. Yeah.

SPEAKER_04:
And then you go, I don't want it. Come get it. Right.

Christopher Hensley:
Come on. And it's between the lender and then the estate or possibly the executor. So the estate might still have. They might. Yeah, they might have responsibility. In fact, they do. They should have responsibility to pay it off. But it will be the responsibility of the executor of that estate or whoever that whoever is responsible for it. All right, we're back. It's 1026. You're listening to KPFT Houston on the HD3 online streaming channel. The show is Money Matters and I am your host, Christopher Hensley with the Society for Financial Awareness. You've been listening to pre-recorded coverage from Financial Fitness Week, which was May 8th, 9th, and 10th out at Baylor College of Medicine. For more information on how you can have SOFA come out to your company, organization, or group, you can visit us on the web at www.houstonmidtownsofa.org. You can also, if you're interested in financial literacy, we have a free white paper called In Our World. It's a 360 degree view of financial literacy. You can obtain that by going out to the website at no cost. And what I'm going to do now is give you kind of a calendar of events, things that we have going on here at SOFA as well as the show, Money Matters, what kind of guests and topics are we going to be talking about in the next couple of weeks here. And we just ended in May with the Baylor College of Medicine. We just talked about that one. On June 7th, that's going to be next week or next show, we're going to have speaker, coach, and improv comedian Steph DeWagner. And we'll be discussing how actors, independent contractors, what we call creative types, this is going to be about the left brain, right brain. are usually bad with money and give us some ideas of how a creative person can get their finances under control. And then on the 14th, on June 14th, we are going to have coverage of the HR Houston Golf Symposium, which this happened about a week ago. at the Reliance Center and this is a meeting of HR managers, human resources staff, people who work in training and development, and we were able to go out and cover that. We did some interviews with people who attended it. We're also going to have some interviews with the Executive Director of HR Houston as well as the President, the current President, of HR Houston talking about the symposium and what it means for Houston, what it means for the Human Resources people who attended. On June 21st, we're going to be speaking with Melanie Bragg, who's an attorney, an author, a speaker as well, and we're going to have a discussion about probate, estate planning, and also some of the books that she has had coming out, or coming out soon, or also the ones that she's already written. June 15th, SOFA is going to be attending the Conroe Health Care Center. They are having a health fair out at the Conroe Health Care Center. It's going to be the first annual spring into summer health care fair and they are also hosting a blood drive. with the Gulf Coast Regional Blood Center. So I know they're going to want to get as many people as possible out to that. There is no charge for attending that and they are doing a blood drive as well. That is on the 15th. Some other topics that we're going to be having here. We're going to have a local non-profit called Family Service Center. That's going to be on June 28th to talk about their car loan program. July 3rd they're going to be out again to talk about their financial coaching program. And then once again on August 16th to discuss the United Way Thrive Initiative which is a program that SOFA and the Alliance for Economic Inclusion are all a part of. Do you have an interesting story or idea about your finances that you'd like to hear more about? Let us know by contacting us at www.HoustonMidtownSOFA.com. And with that, we'll go ahead and transition into the BBC News and we will see you next week.