How Credit Rating Can Affect Your Ability to Get a Job

A bad credit rating can impact a person's ability to get a job.

A Facebook fan had heard that a bad credit rating could keep him from getting a job. He wanted to verify whether this is true and wanted to know where he find out about his credit rating.

It is true that having a bad credit rating can impact a person’s ability to get a job.

Employers are increasingly pulling people’s credit reports before offering jobs … or in some cases, they’ll check a person’s credit after a job offer has been made. If the individual has poor credit, that job offer may be rescinded.

By some estimates, one-third of all employers run credit checks. I’ve also heard statistics suggesting that as many as 70% of all employers do a credit check on employment candidates. I think the 70% figure is probably high. But in any cases, it’s imperative to maintain good credit while job-hunting.

To find out what’s in your credit file, just go to www.annualcreditreport.com. This is the website maintained by the “Big 3″ credit bureaus — TransUnion, Equifax and Experian. Under federal law, you can get one free copy of your credit report every 12 months from each of these credit bureaus. If you find any erroneous or outdated information in your credit files, dispute that data with the credit bureaus.

I also recommend that people use a credit monitoring service, to keep regular tabs on their credit and help guard against identity theft. FreeCreditReport.com has a good credit monitoring service that I use and would recommend to anyone.

Should You Leave a Low Paying Job Or Just Ask For a Raise?

If you're cash-strapped, the simple act of walking into your boss's office and getting a raise could be just the thing you need to boost your finances in this shaky economy.

A Facebook fan who saw me giving career advice on the Tyra Banks Show had a question about whether to leave a well-liked job simply to earn more money elsewhere. My answer, simply put, is: NO. Here’s my advice for that person and others contemplating making a job or career switch solely to snag a higher paycheck.

If you’re working in a “dream job” in the career you planned for, I wouldn’t suggest job-hunting as your first course of action in order to become more financially stable. Plus, you’ve indicated that you’ve looked around at other jobs and don’t want to try any of them. Since you went to college for your current job, and are working in your chosen career, the best strategy is to try to maximize your pay and financial incentives at your present employer. You say the pay is “low” — and indeed your $23,900 a year paycheck falls below the average annual salary of $31,824, according to Sept. 2009 Labor Department statistics. So why not request a raise?

Get a raise by constantly documenting your work accomplishments to demonstrate your performance and what you offer to the organization. In other words, do not just walk into to your boss and say, “I want a raise,” or “I think deserve a raise.” Your boss won’t care that you’ve been doing good work, or that you’ve come to work every day on time. That’s not good enough. That’s a basic minimum level of expected performance. You have to show—in numerical terms—how you benefit the organization. If you saved the company X amount of dollars, if you created a new program that has generated a certain amount of income for the business, if you have been instrumental in training, if you have done hiring, if you have been a sales superstar or a technology whiz, whatever it is that you have done, document that. Then go ask for – and get – the raise you’re due.

Alternatively, why not try to get other fringe benefits and perks from your employer that could be valuable? I’m thinking of extra vacation days, a year-end bonus, or perhaps some freebies — like your employer paying for a host on things on your behalf: ranging from gym memberships to financially planning services to any student loans you may have. It doesn’t hurt to ask. The worst that can happen is that your employer says “No.” And then you’re in the same position. Ditto for asking for a raise.

You can read more about this on a related article I wrote titled, “How to Negotiate for a Raise – Even in a Bad Economy” by following this link – http://www.associatedcontent.com/article/2256855/how_to_negotiate_for_a_raise_even_in.html?cat=31

Disadvantages to Obtaining a Payday Loan

Payday loans are a horrible way to obtain cash in hand.

If you’ve never taken out a payday loan, great. Please never do. If you have, please don’t ever do it again. If you absolutely need to borrow a small amount of cash, turn to your friends, family or employer, but don’t get a payday loan.

What is a Payday loan?
Payday loans are short-term loans made by financial “institutions” designed to tide people over until they get their next paycheck.

Say a cash-strapped person needs money for gas, a utility bill, car repair, to help cover rent or some emergency or other reason before their next paycheck comes in from their employer. To make ends meet until payday, they go to a “payday lender” who verifies that the borrower has a legitimate job with regular pay, and that they have a bank checking account. The customer then gets an immediate $300 or $500 cash “loan” in exchange for writing a post-dated check for that amount, or authorizing a one-time automatic withdrawal. But instead of getting that full amount in cash, the payday lender will deduct its fees from the amount borrowed, typically between $45 to $55. So, on a $300 loan, the borrower actually receives $255.

Fees rival that of loan sharks
The payday lenders fee, or interest, amounts to about 400% per year, some annualize to nearly 800%. These rates are worse than what most loan sharks charge. If the borrowers check then bounces, or they go back to the payday lender to ask for an extension of their loan, they pay another $45 fee (not to mention an insufficient funds fee to their bank if the payday lender had attempted to cash the check). In the end, some borrowers wind up paying more in fees than the total amount they borrowed. For example, if they get stuck in this vicious cycle they could end up paying $500 in interest for a $300 loan, while still owing the original $300 in principal.

Every year payday lending costs Americans $4.2 billion in “excessive fees,” according to the Center for Responsible Lending.

Congress, states seeks rate caps
Congress, through a bill introduced in the House and the Senate, is attempting to pass legislation that would put a 36 percent cap on annual interest rates for consumer credit. The cap would save $5 billion in abusive fees stripped from working families at no cost to taxpayers. While waiting for federal legislation, 15 states and the District of Columbia has already outlawed triple digit interest rates.

Why borrowers obtain payday loans
Payday loan borrowers resort to these loans for various reasons, but very few do so because it is the only option available to them, according to a February 2009 survey by the Center for American Progress. In the survey, borrowers cite convenience and emergencies as the largest reasons.

Source: Center for American Progress, Feb. 2009 study

The FDIC has stated that providing high-cost, short-time credit on a recurring basis to customers with long-term credit needs is not responsible lending.”

Payday loan industry is a $40 billion business made up of 23,000 lenders, such as Check Into Cash.

$40 billion industry
The payday lending industry has about 23,000 lenders, such as Check ‘n Go, Advance America, Cash America and Check Into Cash, where a typical borrower takes out between eight to 12 loans each year.

Payday loan borrowers have little financial wealth

People who withdraw a payday loan tend to have a lower income, net worth and asset level than people who do not withdraw payday loans. These borrowers also are less likely to be a homeowner or a self-identified saver and were more likely to have previously been delinquent on a loan or have had a loan application denied.

Because payday loans are practically synonymous with high fees, hovering around 400 percent, the use of these types of loans may impede the wealth achievement for many borrowers who already have less wealth to begin with.

So please heed my advice: Don’t do business with payday lenders and subject yourself to their shenanigans.

Zero Debt: The Ultimate Guide to Financial Freedom

For more financial advice, get a copy of my bookZero Debt: The Ultimate Guide to Financial Freedom.

Law School Loan Forgiveness

By Lynnette Khalfani-Cox, The Money Coach

The bad news is that most law school graduates have a ton of student loan debt. The good news is that many law schools forgive loans of students who serve in public interest or nonprofit positions.

Equal Justice Works is a great resource for how you can get law school loans forgiven. Browse its website or download its PDF brochure “Financing the Future: Responses to the Rising Debt of Law Students.”

Through that publication and others, you’ll discover how law schools, states, and philanthropies are helping college grads, especially lawyers, pay back their student loans.

The new trend is toward the development of so-called LRAPs: Loan Repayment Assistance Programs, as more and more conscientious members of society recognize that it’s not in the public’s best interest to have a whole generation of students awash in debt.

It’s especially harmful in the legal arena, because law school grads who can’t pay their student loans can’t take public interest (translate: lower-paying) jobs where they could help poor communities or those disenfranchised members of society who, without some assistance, would not have access to all their rights under the law.

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This is an excerpt from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

Student Loan Cancellations for Teaching and Community Service

This post is part of a week-long series about loan cancellations.

By Lynnette Khalfani-Cox, The Money Coach

Two other categories that you might qualify for with regard to getting your student loans discharged or cancelled pertain to service-based work. You can get your educational loans cancelled, or at least greatly offset, for jobs in teaching and public service.

Up to $17,500 Forgiven

Teachers qualify for loan forgiveness in the amount of $5,000 or $17,500 under the Teacher Loan Forgiveness Program. The money is usually doled out to:

• those who teach in low-income neighborhoods
• those who teach certain math, science, and special education subjects, and
• individuals who work in places where there are critical shortages of qualified educators

Additionally, child-care providers, nurses, and others in the medical field who are helping individuals in impoverished areas or high-need communities can also qualify for loan discharges.

So if you happen to be a doctor or nurse working in one of these areas, by all means investigate and see whether you qualify for a loan cancellation and in what amount.

This post is an excerpt from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

Student Loan Cancellations for School-Related Issues and False Certification

In honor of graduation season and those with college student loans, I am posting a series of articles this week about how to qualify to get student loans canceled. These articles are excerpts from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

By Lynnette Khalfani-Cox, The Money Coach

If the school that you attended closed before you could earn your degree, or if you withdrew from the school or were on an approved leave no more than 90 days before it closed, you can also qualify to get your student loans cancelled. Those of you who completed your studies elsewhere or by transferring academic credits from the closed school to another school are not eligible for this discharge.

You Can Get Money Back
The nice aspect about a closed-school discharge is that when a student loan debt is cancelled for this reason, you get a really sweet deal. For starters, you no longer owe anymore payments. Additionally, the government will actually give you money—by providing you with a refund for any student loan payments you made in the past in connection with a loan obtained at the closed school.

Third, with any student loan that gets discharged, the servicing agency that has been handling your loan will notify all three of the credit bureaus that your loan was discharged. They, in turn, will delete any negative credit history, making you eligible to apply for federal student aid and get all the benefits that would be available to you if you did not have any problems, such as a defaulted student loan.

Check on Closures
If you think your school closed and you need to check the date of the closure to determine your eligibility for a loan discharge, you can search the Closed School Database Web site.

False Certification Discharge
A host of other school-related discharges also exist for student loan borrowers, and they fit under the umbrella of what’s called false certification or improper certification. If you took out a direct loan or a Federal Family Education Loan (FFEL) on or after January 1, 1986, you might qualify for a false certification discharge if you (or your parents) received a loan that was falsely certified by an eligible school.

According to the Department of Education, your eligibility to borrow is considered to have been falsely certified if any of the following conditions were met:

• The school admitted you on the basis of ability to benefit from its training, but you did not meet the applicable requirements for admission on the basis of ability to benefit.
• The school forged loan documents by signing your name without your permission on a loan application or promissory note.
• You had a physical, mental, or legal status or a condition—at the time you enrolled in school—that would’ve legally barred you from getting a job in your field of study. For example, you were imprisoned or had a conviction that prevented you from obtaining employment in your chosen area of study.
• You were the victim of identity theft. This new type of false certification discharge became effective July 1, 2006. As of this writing, discharge guidelines were still being developed. But in the meantime, the Department of Education says that you get forbearance and a halt to any collection activities if you show your lender or guaranty agency reasonably persuasive evidence that your loan may have been falsely certified as a result of a crime of identity theft.

Student Loan Cancellation Programs—Big Hassles, Even Bigger Payoff

By Lynnette Khalfani-Cox, The Money Coach

Under federal law, you can get your federal student loans canceled or discharged for many different circumstances.

Reasons for loan discharge:

• Death
• Total and permanent disability
• School-related issues or improper certification by your school
• Full-time teaching or public service work
• Military service
• Bankruptcy

Before I explain the nuts and bolts of what’s required for these various loan cancellations, let me first say that there are a multitude of scenarios that won’t get you a loan discharge.

Reasons that won‘t get you a loan discharge:

• If you dropped out of school for any reason
• experienced personal problems that forced you to abandon your studies
• didn’t like your instructors
• couldn’t get a job after graduation
• were plagued by financial difficulties
• if you thought the quality of the instruction you received was sub-par

None of those reasons will hold weight with the Department of Education.

Perserverance Required
Let me also caution you that getting a student loan canceled or discharged is rare and often requires tremendous perseverance, know-how, and work on your part.

Having said that, even though obtaining a discharge can be a big hassle, it is nevertheless certainly worth the effort and frustration you may experience in the process.

Tuesday through Friday this week I will post a few tips on how to get your student loans canceled, so please check back.

For more information on paying off your student loans, check out my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

How to Qualify for a Student Loan Cancellation or a Student Loan Discharge

By Lynnette Khalfani-Cox, The Money Coach

For a college grad with big student loans, it’s probably the closest thing you can imagine to hitting the lottery: getting a discharge or cancellation of all your loans and making those debts instantly vanish. Unlike the lottery, you’re not going to receive a million dollar prize. But if you can get a lender to agree to cancel or forgive $20,000, $50,000, or even $100,000 worth of student loans, wouldn’t that feel like you hit the jackpot?

Loopholes
Well, here’s the good news for anyone struggling with federal student loan debt: you can, in fact, have those enormous student loans completely wiped out—by taking advantage of instances where you’re already eligible for loan cancellation or forgiveness. Let’s call these instances loopholes of the student loan world, because they represent narrow windows of opportunity that you take advantage of by escaping repayment of your student loans altogether.

Check back every weekday this week for a few tips on how to get your student loans canceled.

And here’s even better news: even if you’re not eligible for a student loan cancellation, next week I’ll tell you about programs and initiatives where you get others to pay off your loans on your behalf. Some of them require you to volunteer with non-profit groups or work off your debts by engaging in activities that promote various social or public goals; others are merely yours for the asking.

In the meantime, also read my blog series “Seven Smart Ways to Pay Off Student Loans Fast.“

For even more information on paying off your student loans, check out my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

6 Steps to Determine If You Qualify to Modify Your Mortgage Loan to Lower Monthly Payments

By Lynnette Khalfani-Cox, The Money Coach

Under Obama’s “Making Home Affordable” loan modification program, owners who are in risk of losing their home or are on the verge of not being able to make their monthly mortgage payments may be eligible to have their monthly mortgage payments reduced down to as much as a 2% interest rate to help them meet their obligations.

To determine if you qualify for the program you must answer yes to ALL of the following questions:

1. Loan Date: Was your loan taken out (originated) prior to January 1, 2009?
2. Primary Residence: Is the property where you want the mortgage modified your primary residence? (If it is a vacation home or rental property where you don’t live, you will not qualify).
3. Number of Units: Do you own a single-unit property or one with four-units or less? (If you live in one unit of the building and rent out one or more units in the same building, up to three units, then you will still qualify).
4. Mortgage Balance: Do you have an unpaid principal balance that is equal to or less than $729,750? (This limit can be higher for four-unit properties.)
5. Monthly Payments: Do you have a mortgage payment (including property taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income? If you’re not sure, use this tool to determine the percentage.
6. Cash-Strapped: Are you having trouble paying your mortgage or are on the verge of doing so? (Answer yes if you are 31 days or more late on your mortgage payments, have had a major reduction in your income since taking out your loan, or have suffered some major financial hardship such as mounting medical bills, financial issues related to divorce, or just had or are expecting a balloon payment coming due or mortgage rate increase from an ARM.)

If you answered yes to all of the questions above, you may qualify for the loan modification program and can move on to the next step, as outlined by the government at Making Home Affordable site.

If you are not in financial hardship and are current on your mortgage, but would like to take advantage of current low interest rates and can’t because there is not enough equity in your home, you might qualify for the Refinance plan under Making Home Affordable program. Check here for my article about the Refinance plan.

Tip #5: Seven Smart Ways to Pay Off Student Loans Fast: Volunteer, Teach, or Serve the Sick

By Lynnette Khalfani-Cox, The Money Coach

A host of working professionals and volunteers can have their loans forgiven or outright canceled. To learn more, read below for my Tip #5 in a series of “Seven Smart Ways to Pay Off Student Loans Fast.” A new tip is presented each day for seven days. Read also Tip #1, Tip #2, Tip #3 and Tip #4.

Tip #5: If you volunteer or have a job that helps eradicate hunger, homelessness, poverty, crime or illnesses, or you teach in a socioeconomically deprived school, you may qualify to have your student loans forgiven.

Working professionals:
The professionals who could have their loans forgiven include:

• police officers
• lawyers
• teachers
• nurses
• doctors
• many others in the health care field

Volunteers:
People who volunteer at AmeriCorps, VISTA or the Peace Corps, or who help impoverished people and those in under-served communities can also have their student loans written off.

Bonus Tip: More than two dozen loan cancellation and loan forgiveness programs are detailed in my book, Zero Debt for College Grads. Get the book now at Amazon.com.