Your credit is valuable, and quite possibly more valuable than you realize. Your three digit score isn’t important exclusively to potential creditors; it can also affect the rates you pay for insurance, where you live and and where you work.

More and more employers are looking at prospective employees’ credit files, and your credit score can be used to determine whether or not you’ll be hired or promoted in today’s job market.  The U.S. Military, certain government agencies and numerous companies require an employee to have good credit in order for that employee to be considered for positions that require a security clearance.

It’s common knowledge that apartment managers have been looking at the credit of potential renters for years.  Today, more and more landlords are also getting into the act and deciding which potential renter gets to rent their property by looking at their credit file.

Is it fair to be lumped into a group because of your credit score?   If the items on your credit report are accurate, a case can be made that these practices are fair.  Insurance companies claim that consumers with better credit scores tend to have fewer claims and, as a result, the cost to manage their accounts is much less than consumers with bad credit scores.  Most employers will tell you that employees with better credit tend to have fewer sick days and are generally considered more reliable and trustworthy, thereby lowering the cost of employment.  Apartment managers and landlords can give us statistics that show renters with good credit take better care of the property and tend to pay their rent on time.  So, while this practice may seem unfair, who can blame someone for wanting to do business with a person that has good credit?

We at National Credit Solutions understand that bad things happen to good people.  Have you ever noticed how some people blame others for everything that goes wrong with them?  Individuals that have good credit tend to accept responsibility for their actions and, when they’ve made mistakes, resolve to make better decisions in the future.  If you’ve had bad things happen in your past and your credit scores have suffered as a result, if you’re ready to accept responsibility and do something about it, please feel free to contact me personally.  I’d like to speak with you, find out what your goals and dreams are, and see what we can do to help you.

Brad Boruk
FCRA Certified Credit Strategist
National Credit Solutions
214 504-7101

Part 2 of 2

How to protect yourself.

• Keep in mind the interest rate increases won’t affect you if you’re not carrying large balances.  Going from 9.99% to 14.99% isn’t going to really impact your wallet if you’re already living within your means rather than living on credit.
  • Be aware of the fine print on your credit cards.  If you know that the new card with the 0% introductory rate for the first 12 months is going to instantly jump to 24.99% if you’re even a day late during that time frame, you’ll probably be a little more careful about making sure the payment is sent on time.
  • Pick cards with lower long term rates rather than teaser rates that expire and then go up.  The longer you have a card the better it is for your credit score, so you want cards that will still be useful to you 2 or 3 years down the road.
  • Read the mail you get from your credit card issuers.  I too have been guilty in the past of just finding the payment due and ignoring the rest of the information stuffed in the envelope, and I’ve been burned by it.  The banks are notorious for slipping in information about rate changes or changes in your terms of service.  Stay informed, that way you’ll be able to change your spending habits before the card goes to 99.99% next month.
  • Cash advances…  just don’t do it.  The interest charged on cash advances is always significantly higher than the rate charged on regular purchases, and to add insult to injury, when you pay your bill each month the credit card companies are going to apply your payment to your normal purchases, not the higher interest cash advance balance, first.
  • This one may be obvious, but PAY ON TIME.  Don’t count on the postal service to get the payment to the bank in a timely manner, send the payment early to be safe.  Remember that until the new laws are being enforced you’re still subject to universal default, so that one late payment could cause the interest rates to go up on all your cards.
  • Along with the obvious pay on time, there’s also stay under your credit limit.  Over limit fees and the increased interest rates are only getting worse and worse, so do your best to avoid them completely.
  • Pay in full to avoid interest.  Credit cards should be used as a convenience, not a replacement for income, so if you’re spending within your means this should be easy to do.  If you’re not living within your means, it’s time to draw up a reasonable budget and figure out what it’s going to take to get your finances in check.
  • If you find yourself using your cards more than you should just to make ends meet, don’t be afraid to ask for help.  Feel free to give our experts a call at 1-888-WHY-FICO.  We can give you the unbiased advice based on our experience that will help you get on track.

The governor of Illinois signed a law today that limits the marketing that credit card companies can do on college campuses.  Personally, I applaud this decision because I have experienced the detrimental affects of poor credit choices while young personally.  It was actually a pretty nice piece of legislation in that it doesn’t prevent credit card companies from marketing on college campuses, but it does mandate that if a college allows a credit card company to market on campus (something that the colleges make a ton of money on, never forget higher education is a business) they must also provide personal finance education as well, something sorely lacking in our society.  Kids going off to college walk through the commons, just like I once did, and see a shiny booth set up giving away t-shirts and Frisbee’s and coffee mugs, which lures them in, and then they get pitched on opening up a credit card with a $1000 credit limit.  If those kids are anything like I was at that age, bills were very much and out of sight, out of mind type of thing, so they’re stunned when they start to receive bills and realize they’ve spent hundreds of dollars that they wouldn’t have if they’d just been spending the cash in their pockets.  Credit is a necessary part of life in America, but it is also dangerous when wielded irresponsibly.  The repercussions of poor credit choices in college can reverberate throughout a lifetime.

Consider this, you go to college, get a great education, but also ruin your credit with irresponsible credit choices, choices you probably made naively because you had never been educated on how credit works.  You finish your degree and get offered your dream job, only to have that offer withdrawn at the last moment because the company hiring you pulled a credit report, saw your credit history, and decided that you were too irresponsible to handle their business.  That certainly isn’t the way you want to start your professional career.  That’s an extreme example of course, but also consider one more common—you do get that great job, and the salary that goes with it, but you are still driving around dad’s ’71 Nova.  You go to the car dealership and pick out the new Accord that goes with your salary and the image you need to put forth in the business world, only to be denied financing.

So what am I getting to with all of this?  Talk to your kids, educate them about credit. You talk to them about the birds and the bees, talk to them about interest rates and credit scores too.