SavvySugar

Ask Savvy: How Do I Get My Bad Credit Under Control? Part II

SavvySugar — Fri, 09 Jan 2009 11:30:43 -0800

Dear Savvy,

I have bad credit and am trying to get it under control. Can you give me any tips on how to control it quickly? Can I get an apartment with bad credit? And is me having bad credit stopping me from getting a better paying job?

I answered the first part of this question earlier. See my answer regarding getting an apartment and a better paying job when you read more.

Savvy says: Let's start with the question about getting an apartment with bad credit. A low credit score indicates that you haven't been paying your bills on time and puts up a red flag to landlords reviewing you as a possible tenant. Landlords want tenants who pay rent on time and all they know of your financial habits is what shows on your credit report.

I've heard that some landlords don't require credit checks, though in all of my rental experience I've never come across this scenario myself. Landlords will likely ask for a larger security deposit up front if your credit is bad, so if you're thinking of renting it's a good idea to start saving up for moving costs. Asking someone close to you to cosign your lease may be an option, but realize it's a big favor: If you don't pay your rent, your cosigner is on the hook for the payments.

As for bad credit preventing you from getting a better paying job, my answer is that if you're interviewing for a position that involves finances, confidentiality, and handling money, then your credit probably contributes to your rejection. Some companies check applicants' credit regardless of the specific position under consideration, but not all companies utilize credit checks as part of the hiring process. So, your score may be a factor in your ability to get a better paying job, but there's no way for me to say for sure.

Source

Ask Savvy: How Do I Get My Bad Credit Under Control? Part I

SavvySugar — Fri, 09 Jan 2009 07:15:45 -0800

Dear Savvy,

See my answer to the first part of this question when you read more.

Savvy says: Not everyone has the same credit score, but all credit scores are based on the same components: Payment history, outstanding debt, length of credit history, any new credit, and types of credit used. Payment history and outstanding debt together make up 65 percent of your total score, so if you have bad credit, chances are these are the areas you should focus on most when repairing your credit.

Your credit score won't turn around in a dash, but adopting these habits will steadily improve your score as you prove to creditors that you're a responsible borrower. Here are the most important steps in repairing your credit - commit to them and hold yourself accountable to each of these items.

Make sure your credit report doesn't have any errors that could be lowering your score. Report any errors immediately.
Pay more than the minimum payment on your credit cards until you've paid them all off. Remember that closing cards can negatively affect your debt to credit ratio, so be sure to keep them open, particularly the ones you've had the longest.
Pay your bills on time, without fail. Whether or not you've made punctual payments is the heaviest factor in your score.
If you continue using your cards, be sure to never go over your credit limit. This puts you at risk for interest rate hikes and a dent in your credit score.

Stay tuned for my answer to part two of the featured question!

Source

Is Bad Credit a Dealbreaker in Serious Relationships?

SavvySugar — Thu, 03 Jul 2008 08:04:12 -0700

Once you learn to love the little things about your guy, there are bigger issues that naturally surface, as your relationship gets more serious. You've seen him handle money from the first date night out, but you never get a glimpse of how he really handles money until further down the road.

Brette McWhorter Sember, author of The Complete Credit Repair Kit knows several couples that didn't tie the knot because of one partner's atrocious credit score. It's important to be on the same financial page in terms of goals and a sense of well-being, but hopefully it's possible to postpone a wedding until both parties' finances are in order instead of calling it off altogether.

Would someone's bad credit scare you away from being his wife?

Source

Maxed Out: Expensive Bad Luck

SavvySugar — Mon, 21 Apr 2008 09:43:25 -0700

This episode of Maxed Out features Jen and Jay, who are all too familiar with the old saying when it rains it pours - for them, a down-pour of bad luck has left them $67,000 in debt on top of their mortgage. It started with the sewage filled basement they discovered after closing on their first home, which was followed by lost jobs and a car crash that required heavy repairs. All the while, Jen was pregnant with their child, which added both happiness and additional financial stress to their already strained state. Both of them have decent paying jobs but are overwhelmed with their heavy debt and can't make ends meet each month. To see how financial guru Alison Griffiths helps the couple focus on fixing their finances instead of letting their unlucky past get the best of them just read more

Jen can't stand their current home and pictures moving in just a few years, and they are weary of spending any money for repairs for this reason. But Alison points out that in three years and taking into consideration repairs needed to resell the house and interest owed on their existing debt, they'll be $87,000 in debt and in no place to buy a bigger home in a better neighborhood.

She instructs the couple to simplify their bank accounts from five accounts down to two in order to cut down on the amount of transfers, negotiate with the bank to consolidate their three credit lines into one with a lower interest rate, and focus on paying off their highest debt first while paying the minimum on the others. She also made the uncharacteristic recommendation to fix the roof on a "buy now, pay later" plan. Their house is their biggest asset and they need to protect it, and in order to stay out of trouble with this kind of payment plan they need to set aside a certain amount each month. That way, when it comes time to pay for the roof they'll have enough set aside.

Alison convinces Jen and Jay that they'll need to stay in their home for at least five years - and maybe more depending on the market - in order to get where they need to be with their debt and be in a position to buy the kind of home they would like. They make improvements to their home to make it livable and comfortable, and suddenly their home didn't become such a point of discontent for them.

Source