Northeast Times

Bad credit, bad everything

— Pay­ing bills late or just skip­ping on them is go­ing to cost you. A lot.

Chris Rhametulla, from Path­ways PA, ex­plains how to clear up debts and hid­den bank fees dur­ing a budget­ing and money man­aging present­a­tion at a North­east EPIC Com­munity Stake­hold­er Group meet­ing at Aria Health: Frank­ford Cam­pus, Thursday, March 29, 2012, Phil­adelphia, Pa. (Maria Pouch­nikova)

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If you have lousy cred­it, you have trouble. Prob­ably more trouble than you know.

Be­cause even if you’re not look­ing for a loan, or even try­ing to get a new Visa card, your crummy cred­it might still cause you a lot of grief.

Maybe even ru­in your life.

Think about it. Your cred­it his­tory isn’t just checked by fin­an­cial in­sti­tu­tions. A land­lord who sees bad cred­it prob­ably won’t rent you that apart­ment you want, or, he might charge you a high­er se­cur­ity de­pos­it. If a hir­ing choice comes down to you and some­body else who has good cred­it, guess who’s more likely to get the job? And, if you ac­tu­ally do get a bank loan, you might be charged more by the lend­ing in­sti­tu­tion than you would if your cred­it was good.

Bad cred­it can even af­fect your abil­ity to get a tele­phone or an ac­count with a util­ity com­pany, said Chris Ra­hemtulla, lead fin­an­cial edu­cat­or at non-profit Path­ways PA.

“No cred­it his­tory is not a (as?) big a deal as poor cred­it his­tory,” he said in an in­ter­view.

If you have five or more neg­at­ive ac­counts lis­ted on your cred­it his­tory, many em­ploy­ers are not go­ing to of­fer you a job, or might res­cind an of­fer when a bad cred­it his­tory is spot­ted, he said.

“People don’t know how im­port­ant cred­it is and how it can af­fect every as­pect of their lives,” Lyn Ku­gel, Path­ways’ vice pres­id­ent for work force de­vel­op­ment and self-suf­fi­ciency, said.

Ra­hemtulla, who is based in Delaware County, vis­ited Frank­ford in Feb­ru­ary and March to talk about fin­an­cial health with those at­tend­ing North­east EPIC Stake­hold­er meet­ings in Aria Health’s Frank­ford cam­pus.

A lot of people don’t know they have bad cred­it or about how that bad cred­it could be af­fect­ing their lives, he said. However, even if your cred­it stinks, there’s good news, Ra­hemtulla said. You can fix it.

“Bad cred­it can al­ways be­come good cred­it,” he said.

First, any­one can get a free cred­it re­port. All three cred­it-re­port­ing agen­cies — Ex­peri­an, Equifax and Tran­sUnion — are re­quired by fed­er­al law to give you a re­port every 12 months. All you have to do is ask for it. It’s free; that’s the law.

Get your re­port on­line by go­ing to www.an­nu­al­creditre­port.com. This is a se­cure site, Ra­hemtulla said. You have to fill in your name, ad­dress and So­cial Se­cur­ity num­ber.

Second, each cred­it re­port gives you a cred­it score. The high­er the score, the bet­ter your cred­it. Mar­riage and steady em­ploy­ment build up the score. Lots of things can lower that num­ber. Not pay­ing your bills or pay­ing them late can do it, too. So can de­fault­ing on loans or bank­ruptcy.

Those who have been un­em­ployed long term, Ra­hemtulla said, get caught in a spir­al. They may have maxed out cred­it cards and let bills pile up. Since those ac­tions af­fect their cred­it and em­ploy­ers want to see good cred­it, the ef­fects of be­ing un­em­ployed might keep them un­em­ployed, Ra­hemtulla said.

Lenders are look­ing for a 680 score or bet­ter, he said.

“If you have only a 650, you are go­ing to have to do something to raise that rat­ing,” he said.

Third, you can be a sol­id bill pay­er who be­lieves his or her cred­it should be per­fect and still get a rot­ten cred­it re­port, he said, be­cause there might be mis­takes. Sev­en out of 10 cred­it re­ports have some in­ac­cur­ate in­form­a­tion on them, Ra­hemtulla said dur­ing a March 29 meet­ing in Frank­ford.

Cor­rect­ing those dam­aging mis­takes is part of what Ra­hemtulla does at Path­ways PA, he said.

“We can get a neg­at­ive mark re­moved,” he said. “People usu­ally come to me out of need, be­cause you can’t even open a bank ac­count in some places if you have bad cred­it.”

If there is in­ac­cur­ate in­form­a­tion on your re­port, dis­putes can be filed on­line, Ra­hemtulla said. Some­times, he files for a “good­will ad­just­ment” if a cred­it score is dam­aged by just a few late pay­ments.

The key to build­ing a good cred­it his­tory, he said, is budget­ing and sav­ing.

“We help people put in place strong sav­ings plans,” he said, adding cli­ents are en­cour­aged to put away money for med­ic­al bills.

Sav­ing is dif­fi­cult for any­one who is un­em­ployed. People who are un­em­ployed for one or two years have taken out much of their sav­ings, even hit­ting their 401(k) re­tire­ment plans.

Avoid that if you can, Ra­hemtulla re­com­men­ded.

In speak­ing in Frank­ford last week, Ra­hemtulla ad­vised vi­gil­ance even if you are sav­ing. Some com­mer­cial banks charge fees that catch some cus­tom­ers un­aware.

Over­draft fees can be high, and so can ATM charges. Those can run in­to money, but they’re not as un­known, he said, as “in­activ­ity fees,” which some banks charge if money hasn’t been de­pos­ited or with­drawn from an ac­count.

You have to keep your eye on the charges, Ra­hemtulla said. ••End­Frag­ment 

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Money mat­ters …

Path­ways PA is a non-profit or­gan­iz­a­tion that does not charge for its ser­vices. It re­ceives fed­er­al, state and private found­a­tion funds to help people with fin­an­cial prob­lems as well as child wel­fare, work force de­vel­op­ment and fin­an­cial self-suf­fi­ciency.

Con­tact lead fin­an­cial edu­cat­or Chris Ra­hemtulla at 800-209-2914 or fin­an­cialpaths@path­wayspa.org. Vis­it path­wayspa.org 

For your an­nu­al cred­it re­port, vis­it www.an­nu­al­creditre­port.com 

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You can reach at jloftus@bsmphilly.com.

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