There’s a lot of buzz about the implications of bad credit and the importance of maintaining good credit, but many of us are still unclear about certain aspects of our credit reports. How long does a bad payment last on your record? Can you receive a loan with no credit history? And what about your job, is it really legal for an employer to snoop at your credit report? The following top three things you should understand about your credit report will answer all of those pressing questions and more.
1. Bad Credit Will Hang Around
Your credit history from today and two years back accounts for around 70% of your credit report, while the other 30% dates back seven to ten years. Good credit can hang around for around ten years while your last payment delinquency may show up for seven years. This is important to keep in mind, because one bad payment can haunt you for years, despite the fact that you’ve maintained a clean record ever since.
With that being said, your credit score can change on a day-to-day basis for various reasons such as if you apply for a new credit card, declare bankruptcy, or miss a payment. Generally though, your score will not change more than 30 points in one quarter. In addition, your credit score may vary depending on which of the credit bureaus reports your score, as each has their own scoring methods.
2. You Can Still Receive Loans With Bad or No Credit
If you have poor or no credit, there are options available that may prevent banks and lenders from turning down your loan request. eCredable.com, for example, offers you an All My Payments (AMP) credit rating, which takes into account your monthly payment obligations such as rent, utility, and cell phone bills to help establish your creditworthiness. These kinds of payments generally do not show up on the traditional credit bureau reports, but they can provide proof of your payment history. Some, but not all lenders will accept this form of nontraditional credit worthiness.
In the case of an emergency, you can apply for loans for people with bad credit. Typically, these bad credit lenders do not ask to see your credit report, so it usually does not matter if you have bad or no credit. But because payday lenders are taking a risk by supplying you with a loan, they do charge high interest rates and fees. Only apply for a cash advance if it is an emergency situation and if you are capable of paying back the loan in short order. Also, read and understand all of the loan terms before applying.
3. Your Future Employer May Judge Your Credit Score
While it’s not uncommon for credit card companies and landlords to check out your credit report, now potential employers are gathering around to sneak a peek too. And yes, it is perfectly legal for them to do so. A 2010 Society for Human Resource Management survey revealed that 60 percent of employers conduct credit checks on prospective job candidates.
These employers are using your credit score as a judgement of your character and financial reputation. Employers, especially those in financial fields, want to determine your level of monetary responsibility before allowing you to handle company finances.
Even though a bad payment can stick around on your credit record for a while, this should not discourage you from taking strides to improve it. And regardless of whether you can still borrow money from a lender with poor credit, your future employer may want to see your score, so you should always build your score to the best possible number to help prevent any possible obstacles. If you’re still experiencing uncertainty when it comes your credit score, do not hesitate to contact a financial advisor or credit counseling organization.
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