Q #1: How do credit card companies get data about my financial situation?
A #1: The main way credit card companies obtain data about you is through creditors and public records. Everything from past and present credit history, to your limit of credit on each account, available credit, the date you opened up your account, payment amounts, and even your late payments are on file and on record.
If you’ve had bankruptcies, liens, child support payments that are overdue… all of that is available via public record. You also should know that your credit file has personal information as well such as previous names and addresses, your employment history, social security, and even your date of birth.
The 3 major credit bureaus sell these reports to various different parties that have the right to know this information including creditors, employers, banks, landlords, debt collectors, mortgage lenders, etc.
Q #2: How can I get a copy of my credit report?
A #2: If you recently applied for credit, employment, insurance, etc… and you were denied… you have a right to know what is in your credit file.
That’s why the 3 major credit bureaus (Equifax, Experian, and Trans Union) are all required to allow you to get a copy of your credit report once a year for free. All you have to do to request a free copy is go here online:
Q #3: Should I get a credit card to help me rebuild my credit?
A #3: One of the ways to rebuild your credit is by establishing a positive credit history. And so one of the best ways to do this is to get a credit card and making sure you payoff your balance each month.
The tricky part is that you could be tempted to overspend once again and then fall deeper into debt. So a level of discipline is required to make sure that you only charge on your credit card an amount you can pay off each month.
The draw back also is if you have too many credit cards… it may make it more challenging to obtain more credit. So make sure you only have a few credit cards to help you establish good habits and responsibility for managing credit. If you can establish good habits and pay off your credit cards on time… this will help you establish a good credit history.
If you still have negative credit history on file… then what worked for me in the past is applying for a secure credit card. A secure credit cards is available when you put up a certain amount as collateral… and then that becomes your credit limit. This is the only way I have been able to get a new credit card even when I had poor credit history.
Q #4: How long will my bad credit history stay on file?
A #4: The average is 7 years. Any negative history including late payments, collections accounts, judgements, unpaid child support, and tax liens can be found in your credit report. Some may be included even longer depending on your state as well.
If you file for bankruptcy under Chapter 7 or 11… or a dismissed Chapter 13… this will usually stay on your credit report for approximately 10-years from the date it was filed.
Q #5: Can I still get a loan even if I have bad credit?
A #5: Listen… it isn’t the end of the world if you have bad credit. There are several options you have available to qualify for a loan. Here’s some tips:
a) Find a co-signer who has good credit. A family member or someone you know would work fine. If they have good credit and willing to co-sign for you… you should be able to get a loan with better rates even with your bad credit.
b) Some banks and other private lenders are willing to work with you. You will have to contact them directly and explain your situation. However… be warned that if they do give you a loan… it will be at a much higher rate depending on your credit score, the amount, and the period of the loan.
c) If you’re trying to get a student loan… you can apply for a combination loan which basically consolidates any other loans you have an includes it with your new student loan. Again… you may need a co-signer in order to get approved for this type of loan.
d) If you still have more questions or you want to find out what other options you have to get a loan even with bad credit… contact us today.
We can help you find out what options are available to you with your own particular situation… and then we can point you in the right direction. Just give us a call and we’d be more than happy to help you in any way we can.