Credit Card Debt Trap #2
By Mike Wayman
If you’ve saw the last post about credit card debt traps you’ll understand how easy it is for credit card companies to take hold of you financially and absolutely ruin your credit and your pocketbook. This series is dedicated to exposing some of the most common debt traps so that consumers can avoid paying thousands of dollars in interest payments to their creditors and also avoid bad credit.
Understanding the modus operandi of the major credit companies is one of the first steps in avoiding credit card debt traps and avoiding bad credit. The real problem is that most people don’t know they’ve been scammed until it’s too late. You can avoid credit debt traps but some people may need help or advice. Call us any time if you need help with a credit debt trap or if you want to know if you can get some of the bad credit removed from your credit report due to a debt trap.
Understanding Your Credit Score
By Mike Wayman
Many consumers do not understand the importance of knowing the criteria used to determine their credit score. Knowing these details helps when you apply for a loan, seek to modify an existing loan, apply for a job, or even change auto insurance companies.
The credit score is comprised of five categories: Your payment history, the total amount you owe on all existing loans, the length of your credit history, the amount of new credit you have, and the types of credit you use. Lenders look at how well you make payments on existing loans and how many times any payments have been late. The also look at the total amount you have outstanding on loans, and compare that to your total worth. For example, owing more than the value of the property you own is always viewed negatively.
Also considered is how long you have been using credit. Someone with a history of using credit successfully for twenty years usually fares better than someone who just got his or her first credit card six months ago. Lenders look at how much credit you already have, and determine whether you are overextending yourself by applying for more, and lastly they look at the types of credit you use and whether you typically carry unpaid balances on store charge cards or pay off balances regularly.
Essentially, your credit score affects every aspect of your financial life, so it is important to know where it comes from.
Think Bad Credit Only Affects Loans? Think Again
By Mike Wayman
Bad credit definitely affects your ability to secure a loan, but it can also affect you in other ways. Unfortunately, a negative credit rating can even affect your success at finding new employment.
Potential employers must ask your permission before pulling your credit report for review, but it is becoming a standard part of many job applications to request this permission of you. If you refuse to give your permission, you may not even be called for an interview. If you give your permission, and you are denied employment because of something contained in your credit report, the potential employer is required by law to disclose to you exactly what it was that caused your denial of employment. But this is an easy point to sidestep if an employer really doesn’t want to explain. Many other reasons can be given for not continuing to consider you for employment, so it is not unusual for an applicant to never know what it was that caused the denial.
Essentially, once your credit report reflects negatively for any reason, you are likely to bear consequences for a period of time whether the negative report is truly a reflection of irresponsibility on your part, or simply the result of hard economic times, even to the point of making a new job hunt more difficult.
