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Skeletons don’t remain in closets, old mistakes come back to haunt you & elephants never forget. This is your credit report.
More than once, I’ve had a client get blindsided by a “stain” on their credit report that they didn’t know about or thought was handled. Fear of these issues keep a huge number of people from taking the first step toward owning their own home, because they don’t believe they can get a mortgage.
Credit history and scoring is a mystery, even to those “in the business”. But one thing is clear: Once you have an negative entry, it is a time consuming, sometimes painful process to take it off. Late payments, unkept promises by credit providers, co-signed accounts and unclear contracts can unexpectedly creep into your report at the most inopportune times.
Let’s back up. As young adults, we are encouraged to build a credit history. This is the record that people who loan you money or provide services that get paid for after delivery review to determine if you can be trusted. Often, we cannot establish these initial accounts without a trusted co-signer guaranteeing our performance. First checking accounts, telephone contracts or small credit lines serve to show future creditors that we pay our bills, that we use our money responsibly.
Sometimes these contracts include conditions or terms that we don’t understand like prepayment penalties, changing interest rates, minimum balances or length of contract.
A payment is missed or a check is bounced or you have a dspute that takes time to resolve.
Despite promises not to report, many companies still do, causing that credit history you started building to look more like a Rap sheet.
What can you do?
Before you begin, if you still have the chance, read any contract. If you’ve already signed, read it anyway. Yes, it is full of fine print & legal terms. It’s more important than the TOS on FB, so do it. Know how your credit provider will deal with problems. Know how to repay and do it.
If you don’t think you can really afford it, honestly, don’t sign the contract. The short term benefit really isn’t worth it.
Think twice before becoming a co-signer on someone elses account. This means you will be held responsible if they don’t pay.
If you have a problem, find someone to help RIGHT AWAY. There is contact information on virtually every communication. If they don’t respond, go up a level, use government resources (like the Attorney General or Department of Commerce) or find a third party to assist you.
Credit advisors are available from many non-profit agencies (dial 311). DO NOT go to company that demands up front payment for their services. These are often scams.
Once there is a “stain” on your credit report, you can work with the credit provider & the reporting company to have disputed items removed. This process is not fast; it typically takes from 4-6 weeks, assuming the creditor does their part. You have to follow up, as there is little incentive for any of these parties to act beyond your regular requests that they get it done. You can legitimately remove bad entries by working diligently.
Unfortunately, sometimes the only way to get rid of an entry is to wait. Scores are affected by how recently the negative entry happened. Some lose their potency after 6 months, some hang on for up to 7 years.
In designing your life, the credit report is part of the canvas we are all asked to use. It’s almost impossible to avoid, so take control and make it work for you. You can get past it.
