Why Should I Care about My Credit?

It’s a fair question: “If I’m not planning to make a purchase on credit anytime soon, why should I care about my credit at all?” While it’s true that the most commonly known use of credit has to do with getting approved for a loan, there are other situations when credit can have a positive or negative impact (direct or indirect) on our lives.

  1. More employers are checking the credit of potential employeesMany employers check job applicants’ credit prior to making a hiring decision. This may seem unfair and irrelevant to many, but employers reason that since a person’s credit is indicative of their efforts to repay financial obligations, employers may use that information as an additional insight into the job applicant’s overall qualifications for employment. Also, it does seem reasonable to assume (and I’m sure research bears this out) that those with more negative credit “issues” on their reports will have to spend more work time dealing with personal issues. Hence, productivity actually DOES become an issue related to one’s credit. Finally, when the potential employer is in the finance, law enforcement or government sector, credit checks are even more common.
  2. Many landlords check a renter's credit prior to renting out spaceMany landlords, especially property management companies, will check potential renters’ credit scores. Since renting out their property involves the risk that the renter will not pay their obligations on time, a credit check shows which applicants have a history of on-time payments and which do not.
  3. Many auto insurance companies base a portion of their monthly premiums on the vehicle owner’s credit. While morally disputable for some, there is a clear correlation between an individual’s credit score the average size of claims that those with similar credit scores submit.
  4. A utilities account cannot be denied based upon one’s credit, but the company can certainly jack up the security deposit.

So, even if you’re not considering making a major purchase any time soon on credit, it is still a good idea to keep your credit report accurate and as positive as possible.

Todd

Todd Christensen
Director of Education
www.NationalFinancialEducationCenter.org
Facebook: MoneyDay2Day
Twitter: Day2DayMoney

Correcting Credit Report Errors from Defunct Creditors

March 9, 2011

Having taught nearly 500 personal finance classes since 2004 to over 8,000 individuals, it’s not often that I get a question about course topics that I haven’t heard before. I love it when I do, though, and that’s exactly what happened last week at a local housing authority. Here is the question:

What can I do if the title loan company to which I once owed money but have paid off in full has gone out of business but is still listed on my credit report with money owing?

At first, it sounded completely new, but in the end, much of the method for dealing with this situation goes back to the typical process for correcting one’s credit report. Here are the suggestions that we, as a class, came up with:

  1. First, dispute the credit report error online through each of the thee national credit bureaus.
  2. If that doesn’t work, call the company using the phone number listed on the credit report. Attempt to correct the problem directly with the title loan company’s representative.
  3. If these attempts fail, try looking up the company on the state’s Secretary of State’s business entity search website. The business listing should include, even if the company has gone out of business, an owner or board member to contact (likely a mailing address). Make contact with a request for information on how to address accounting errors.

These same suggestions apply to similar situations involving other defunct creditors listed on one’s credit report, including, for example, debt collectors, banks and credit unions.

If you’ve had success dealing with such situations in other ways, please feel free to share them here for the benefit of others.

Have a fantastic day!

Todd

Todd Christensen
Director of Education
www.NationalFinancialEducationCenter.org
Facebook: MoneyDay2Day
Twitter: Day2DayMoney