Credit Questions and Answers You Need to Know
Whether you are getting your first credit card or trying to find a home when the credit you already have isn't the best it can be, here are a few questions that might help you through the maze of credit rating and erasing bad debt. Even though the outlook may seem bleak at the moment, remember there is always hope and you can repair your credit if you are willing to do a little work and a little research. Here's a look at some questions that come up often in discussion about credit and the answers you need to know.
Is there life after bad credit?
Having bad credit is not the end of the world, although it might feel that way sometimes. These days when so much hinges on a good credit rating there are more an more opportunities for you to make good on a bad rating. The best thing to do is shop around for a credit company who is willing to work with you. Each company has its own set of standards when reviewing an individual's account and some may be more lenient than others when rendering a final decision. Some might take into consideration the work you've done to make improvements and actually take a chance on you. The worst that could happen is you get denied.
What should I consider when getting my first credit card?
To start with you should sit down and do a quick self evaluation. Are you the type of person who frequently procrastinates? Do you have a solid job at the moment that will allow you to pay your credit card bill on a monthly basis? Why do you want a credit card at all? If you are a student you may be getting a lot of offers from companies who want to give you that first card, but remember, this is not "free money" and shouldn't be treated as such. The biggest question of all should really be: are you responsible enough to have a credit card?
Is it necessary to read the fine print in the credit card agreement?
Of course it is! Not everyone reads the fine print, but everyone should. The small print looks complicated and bothersome to slog through and that is why most people tend to disregard it. Often there is information contained in that tiny print that might save you money. There might be instructions regarding hidden fees, or fees you might be charged should you go over your spending limit. You might also find information regarding rate increases after a certain period of time. "I didn't know" is not a valid excuse no matter how much you mean it.
Should I try using this ad for credit help that I got in my email?
Be very, very careful about which ads you answer when looking for help re-establishing your credit. Many of these ads are scams that will promise you the moon and deliver absolutely nothing. No one can completely erase bad credit and anyone who claims to be able to do so is lying. Fly by night companies like this will only get you further into debt when you pay them the money you could have been using to pay off some of your creditors. If you are seeking solid financial advice, visit a reputable company and let them help you.
How important is good credit when it comes to getting a job?
If you had asked that question twenty years ago you probably would have gotten laughed at. Today, more and more companies are using credit checks as a standard part of the new employee hiring process. A prospective employer cannot refuse an application because the applicant suffered a bankruptcy; however there are other things such as foreclosures and collection actions that might be used against you. While the background check still reigns first and foremost in the hiring process, the credit check is gaining ground in popularity.
If employers are doing credit checks, should I totally rule out applying for a government job if I have bad credit?
Ironically enough, a governmental job is the least likely to use your bad credit against you. Unless you are applying for a job that requires high security or the handling of cash, they will only use it to verify employment history and to make sure your social security number is valid. You should be more concerned if you have any kind of criminal record. Finding credit mishaps are no indication of whether or not an employee will steal, however a series of bounced checks might be another story.
My credit was fine a week ago, now it's not - what happened?
There are a few things that can cause your credit to take a dive without you knowing it. The first is an inquiry. In this case a credit card company, utility company or mortgage company might request a look at your credit information. You might have done some work to better your rating in the last couple of months; however it takes a few more months for that information to show up. Another more obvious problem might be the failure to pay your bills on time.
And lastly charge offs might be another reason for receiving bad credit. A charge off is when you didn't pay a bill, forgot to pay a bill, and it has become obvious to a company that you are never going to pay the bill. The company will write off your incompetence as a loss on their books for their taxes.
If I have immaculate credit and I marry someone whose credit is in bad shape, does their bad credit become mine too?
No, your spouse's credit does not become yours - unless you both enter into a joint loan. As soon as you both sign your name on the dotted line of a loan or credit card that loan and any debt incurred from it, belongs to the both of you. If your partner has bad credit to begin with you might not have the chance to worry about a joint loan becoming a problem because you probably won't be approved for it anyway. In situations like this it is best to discuss your financial plans before the wedding so you both know exactly what to expect of each other.
Will I still be able to purchase a home with bad credit?
It won't be as easy as if you had good credit, but it is possible. We all suffer setbacks in life and sometimes an illness or loss of a job isn't entirely our fault. We may have even done some hard work to get our credit back on track after the difficulties but that stain still lingers on our credit report and always will. You have already taken the first step in securing a home loan, you have tried to get your credit back on track. The best thing you can do for yourself is to order a credit report and go over it very carefully. Look for any discrepancies and contact the companies you might have discrepancies with. Once these are cleared up you can request a new report sent out to all of your creditors.
Are there any other options available when purchasing a new home?
Yes, you can go directly to the homeowner and see if they are willing to sell the house to you under a selling finance agreement. This provides a contract wherein you make payments directly to the actual seller instead of making payments to a bank. Another option would be lease-to-own. When you do take this kind of option you will have to do some homework ahead of time and figure out how much rent is going for a down payment, and after a certain period of time, how much credit you are going to end up with.
 
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Today's Tip On Credit Repair
Finding the right credit card can be confusing because there are a lot of things to keep up with like APR, annual fees, and hidden charges. The best way to compare credit cards is to compare the APRs. The general rule is that the lower the APR, the lower the cost of credit. Try to look out for the hidden charges that are behind credit card companies. Sometimes companies like to hide things away in the fine print. Even if fine print annoys you, you should try to read it. There are often times charges for charging more than your credit limit, late fees, or periodic finance charges. Little charges here and there will end up costing you massive amounts in the long run. |
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