FAQ'S AND LINKS

            To begin with, let me tell you that we love doing stuff like this. Imagine, you're a fairly well-to-do person, knowing that you can get credit almost anywhere for almost anything. Does that not feel good? Heck, it makes me feel good from over here! Think about it -- you've never been late on anything in your life. You receive pre-approved, not B.S.,  pre-selected, letters in the mail from various companies each and every week. 

            Then, someone pulls the rug up from underneath you. Yes, the rug. You see, you thought you had perfect credit because you have always paid your bills on time; you've never-ever been 30 days late on anything; you're a millionaire, blah-blah-blah! Then how could you only have a 649 middle credit score? 

            Don't you remember when we wrote that the credit scoring system is koo-koo? Well, here's another example. If you've never been late on any bill and you have over 20 trade-lines, then why in the heck aren't your credit scores not in the 800's? Too many variables, many misunderstood. However, with the right tools, guaranteed by the 3 major credit bureaus themselves, we can find points for this, otherwise, perfect credit person.

            As it turned out in this case, this client was either maxed out or very close to the max available credit on 8 different pieces of credit (unsecured credit cards). She had a middle credit score of 649 and needed to be at 700 to obtain an interest rate of 5.9%. We found 56 points for her; her re-finance rate went from7.25 down to 5.9%. This stuff works for good credit people as well as for people with that "curb-kicked credit."

             It is true that their are certain types of jobs where knowing a person's credit history would prove to be relevant. For example, applying for a job at a bank in which you will be working with money. Does the bank have a right to know how you handle your personal finances since you are going to be handling other persons' personal affairs? Sure. Why not? It makes sense.

            The problem we have with this business is that at the time you apply for that cushy bank job, you may have just gone through a break-up or a divorce or whatever. By happenstance, your credit is not where it normally is. Do you think that your application for employment with Big Bad Bank cares? Probably not! They want to hire personel based on credit scores, not the dedicated little people who would might make the most loyal employees. 

            But, it is not entirely the bank's fault. You see, the bar has been raised for the "just-in-case" scenarios. What we mean is that if your were hired with that ugly credit and something went terribly wrong (e.g., you embezzled a boatload of money), the bank does not want to eat crow and admit that they had evidence that you weren't paying your bills (an indicator that you are irresponsible), and face an ugly lawsuit. To me, this is case-by-case stuff. Here's the real trouble: having to have your credit score matter when you apply for minimum wage jobs.

•       True story: We had a client recently come to our office in tears. She didn't have transportation to be able to work except close to her home. She applied for a job at the Family Dollar store as a CLERK! Not a cashier. She got denied because of her credit. Are you for real? Sadly, yes, and we have copies of her terrible plight in our offices. This is where it makes no sense. Nevertheless, we now further understand the playing field out there in regards to the importance of credit and credit scores. 

            First of all, filing for bankruptcy should absolutely be your last choice of settling your financial affairs. There are many alternatives about which you may not know that should be explored. Having said that, let us say this: there are times when you are going to file for bankruptcy, and there are two (2) different types of bankruptcies for individuals (other than farmers-- yes, they have their own special category).

1.     The first type of bankruptcy is known as a Chapter 7, straight liquidation of your debts. In other words,  to the extent that the law allows it (not everything can be put under bankruptcy; e.g., student loans), you may include everyone of your eligible debts (cars, houses, credit cards, etc.) under this form of bankruptcy and have the debts legally discharged from any further obligation. PLEASE CONSULT A LICENSED ATTORNEY for the most up-to-date law in this regard. Choosing this route will guarantee a 10 year mark-from the discharge or dismiss date- in your credit file before it falls off your credit report.
2.     The second type of bankruptcy is known as a Chapter 13-- wage earner. This types involves you re-structuring your debts and paying them out over a period of years (usually 3-5). If you are a W-2 employee, the court trustee (the person who handles your case from the court's side) will almost always insist that the payments be taken from your check as opposed to allowing you to make the payments after you get your check. It's called the ''I don't trust you system," but for good reason. If you don't get the money in the first place, you can't come up with that good excuse to spend it on something else, thereby breaking your agreement with the court.

            When you start a  bankruptcy and don't meet your court-approved obligation to pay back at a set amount over a period of time, your case will be dismissed. With a dismissed bankruptcy, you still have a legal obligation to pay each and every creditor, plus you have a big fat, ugly mark on your credit file. If you carry your case to fruition (finish it), you receive a discharge, relieving you of any further obligation to those creditors. 

           Your credit scores stand a great chance of going up quickly if you fulfill the obligation to the end. A dismissed or discharged Chapter 13-- wage earner will stay on your credit file for 7 years from the filing date, not the discharge or dismiss date. Equifax is the only bureau that thinks your Chapter 13 can stay on for 10 years; they are wrong according to the Fair Credit Reporting Act.