00:10:55 TONYA: Absolutely. That’s a great point. So the next one is, you can rebuild a poor credit history.
00:11:06 STEPHANIE: Yes! Sure, you can do it! Yes.
00:11:10 JOHN: It’s one of those things, you know. It’s tied to your social security number. For better or worse, it’s not going anywhere, right? So you can always rebuild. If you’re in a place right now where you’re kind of confused. You tune in because you want to know some of the things you can do. We’ve mentioned a lot of them already and we’re just going to keep hitting them home, right? Thirty-five percent of your score, just pay your bills on time. Now I do want to point out that if you’ve got a credit card due on the tenth of the month, and you forget. You’re out of town, you pay it on the thirteenth. Yeah, you may get a late charge, but it’s not going to hurt your credit report. You have to be a full 30 days behind before it’s actually going to show up as a negative mark on your credit report. Obviously not something that you want to flirt with and try to avoid that, but it’s not the end of the world if you’re a couple of days late.
00:11:50 TONYA: Yeah, definitely. For someone who would want to rebuild their credit score, just like, you know, watching a course like this, that’s a step in the right direction. Understanding how credit works so that you can actually begin to make credit work for you. So by finishing this course, you’re one step closer to rebuilding your credit score.
00:12:06 JOHN: So let’s say if you have a bankruptcy, for example. That will stay on your credit report for ten years, and that’ll eventually fall off. But it’s not the end of the world.
00:12:13 TONYA: Yeah, it’s not a scarlet letter. You are not barred from the financial services system just because you had that bankruptcy.
00:12:19 STEPHANIE: Yeah. The key here is how you are managing everything else to rebound from that.
00:12:26 TONYA: Yeah. You want to identify the factors that contributed to it so that you don’t get back in trouble again.
00:12:29 JOHN: Exactly.
00:12:31 TONYA: You know, I like to say that credit is almost like elastic. It’s like a rubber band. You can stretch it out, you can overuse it, but it comes right back. You know, stretch it out; comes right back. And if someone is watching this course and they’re saying “You know what? I want to improve my credit score,” which will probably happen as a result of watching this, hopefully. But you start to understand how credit works for you and so, even if you were to go apply for a loan for a car, or if you went and purchased a home and your credit score dropped, you know what you need to do to rebuild it. And you have the tools necessary to rebuild it. As long as you have those tools and those good habits, you’re going to rebuild your credit score.
00:13:00 STEPHANIE: Mm-hmm. It’s funny that you mentioned called, because a lot of times, what I’ll do with customers when I sit down with them, is when we get on the topic of their credit score and credit reporting, we’ll call together to the lending institution, and even if they are a couple of days late and just see if there’s anything that can be done. But it really takes that proactive action to just make the call and talk to them. They’re really open to talking to you, too, because they want you to pay.
00:13:28 TONYA: I’m happy you brought that up, Stephanie, because I think that people don’t understand there are people on the other side of those lines who are understanding, and they are compassionate. And a lot of the times they want to see you do well, too. And so just communicating your situation to them, if you know that you’re going to be late, or if you know you’re experiencing an issue or you have questions, they often are more than happy to help you. And if you get someone who isn’t, call right back. You’ll probably get somebody else. You’ll get somebody else and they’ll probably help you.
00:13:53 JOHN: Yep. All right, so let’s take this one. Your credit can prevent you from getting a job.
00:14:00 TONYA: Yeah, unfortunately, that’s true.
00:14:02 JOHN: It’s one of those things where when you’re applying for work, your employer may look into your credit because they are looking at the field. There’s going to be a whole bunch of different people they’re looking at, and depending on what type of role that you’ve applied for or they’re hiring for, it may make sense that your credit would affect that.
00:14:19 TONYA: You know, and it seems unfair because it can seem like a catch-22, you know. My credit score dropped because I didn’t have a job to pay my bills and now I can’t get a job because I don’t have a good credit score. It does seem like a catch-22.
00:14:30 JOHN: It’s like the entry-level position with three to five years of experience…
00:14:33 TONYA: Yeah. It is, but you know, the reality is they do use credit scores and credit reports to get a basic understanding of how responsible you are. And it might signal to them that you’re not as responsible as they hope you’d be for that job.
00:14:46 JOHN: But the bright side, like we’ve been saying, there’s always room to improve, always room to improve it and make that credit score go up.
00:14:54 TONYA: With tools and action you can do it.
00:14:56 STEPHANIE: Yeah. And I want to bring up, too, that if you are a great candidate, sometimes one of the things that they will look for is a letter of explanation. Maybe what has happened in the past, and that may be a solution to overcoming an obstacle like that, especially if you’re qualified for every other area; that’s the only thing. So just know that that may not be the end-all, be-all. There may be some ways around that. But again, it’s that open communication. You have to make that call. You have to sit down and say, “Hey. Here’s the deal. I haven’t been as responsible before, but this is what I’m looking to do and change my life.” And really, ultimately, improve.
00:15:34 TONYA: And Stephanie, you’re right. That’s something that I did with one of my first jobs out of college, because I went to college and lost my mind, and racked up all this credit card debt. Got out of college, and really, I had to write that letter. Luckily, it was a smaller company and they were more understanding and they gave me a chance. But like we said, people are people. Communicate with others what was going on in your life. Did you have a medical emergency? Was there job loss or something of that nature? And don’t count yourself out. Just because they give you that “We’re going to pull your credit report.” (inaudible) Don’t count yourself out.
00:16:02 JOHN: Well, I’m glad you guys bring that up, because on something that you can take action on today is go to AnnualCreditReport.com. It’s the only government-sponsored website. You can get your credit report for free. We recommend you just pull one of them, because each bureau has to offer you your report for free in a 12-month period. So long story short, every four months you can pull from a new one and cycle through them. So what’s on your credit report is typically there for about seven to ten years. So if you have had some mistakes in the past, maybe missed some payments, the bright side of that, too, is that the farther those things are in the past, the less likely the employer is maybe going to care about it, right? So if you had some bad mistakes two, three years ago but you’ve shown excellent payment history the past two or three years, it may still help you out.
00:16:48 TONYA: Yeah, so pull that report. Know before you go, know before you apply.
00:16:50 STEPHANIE: You got it. Credit repair companies can erase bad marks on your credit report.
00:16:55 TONYA: You know, this one’s floating around a lot out there, but it’s actually false. It’s understandable why people would think that because it’s floating around out there.
00:17:02 JOHN: A lot of companies say they can remove those bad marks.
00:17:03 TONYA: Yeah, and they sound really convincing.
00:17:05 STEPHANIE: Yeah, they do. The radio ads always have this bip-boppety music and they’re like, you have problems, we’ll solve ‘em.
00:17:12 TONYA: All of them. It doesn’t matter how big they are, we’ll solve them. And is it legal?
00:17:16 JOHN: At the end of the day all they’re doing is saying, “We’ll go into your credit report and correct things that are actually incorrect and you can pay us for that.” But that’s something that you can do on your own for free. Because if there’s something on your credit report that’s not correct, you can dispute it. They have to look into it and get back to you within 30 days.
00:17:34 TONYA: Think about all the other ways that you could use that money. You know, instead of paying someone else. You know, you could use that money to build your savings account, or do something you care about, or go on a shopping spree.
00:17:45 JOHN: Yeah. Pay off that credit card, right?
00:17:47 TONYA: Yes. Pay off that credit card, John.
00:17:48 JOHN: Right, we’ll start there.
00:17:50 TONYA: So absolutely, yes. And I think that it’s important people understand that they have the power to improve their own credit. It doesn’t rest in the hands of some company that has its expertise that you don’t have.
00:17:59 JOHN: Exactly.
