Dealing with past debts
CLICK HERE if you missed part two of this chapter of “Repair Your Credit.” Since you’re here, let’s talk more about how to get a handle on ugly, old debts.
We’ve talked a bit about this already, but here are some new wrinkles. When dealing with past debts, don’t let them take precedence over your current debts. The newer the reported debt or delinquency, the more detrimental it is to your personal credit. Paying off a past collection will not remove the incident from your report, so be sure to keep your latest bills paid to date and deal with the past as you get around to it. Negative credit history, depending on the type, cannot stay on your report for more than seven years; most incidents leave your credit report after three.
Keep in mind that if you have a large outstanding debt or judgment against you, you should know the statute of limitations for the creditor to collect that debt. Usually it’s four years, but this can vary. Every time that they receive a payment, the statute of limitations resets. If it’s going to take you more than four years to pay off an old debt and a tough decision has to be made, focus on more recent debt. Once the statute of limitations on old debt expires, wait the 36 months and the incident leaves your credit report. Either way, though, if you need quick cash in an emergency, no fax cash advance in Nebraska is an option regardless of your credit.
You want a job? How’s your credit?
Fair or not, more employers than ever are making it a requirement to run credit checks on applicants before choosing whether to hire them. If you’re applying to work at a bank or similar financial field, I can see the wisdom in this. However, it seems foolish to me beyond that. But don’t mind me, I’m riddled with opinions. Employers are likely thinking that a high credit score on the applicant’s part indicates overall responsibility. But life situations change, and credit can be brought down during one low period. That’s why I say that unless you’re planning to work in the field of consumer or commercial finance, run fan away from companies that require a credit check (not a criminal background check, a CREDIT check) before employment. People with past credit difficulties can be just as responsible and hard-working as those with higher FICO scores.
How the credit agencies determine your score
Again, here’s something I’ve alluded to, but let’s look at it in a bit more depth. When credit bureaus are determining your credit score, they tend to do so by looking at the following characteristics evidenced on your credit report:
Late payments
This is an obvious one, but it cannot be stressed enough. If you have delinquent payments on your report, lenders you wish to do business with will harbor some fear of you repeating the delinquency. Remember, late payments will plague your report for three years before cycling off.
Avoid late payments to your creditors any way you can. As a last resort, you can always get a payday loan to avoid a late fee or delinquent payment from being reported to the credit bureaus. This is a far less costly solution to you in the long run, as the interest rates that you will have to pay over the next three years with any new lenders will be higher otherwise with a reported delinquency.
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