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 If the individual has poor credit, that job offer may be rescinded.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 If you find any erroneous or outdated information in your credit files, dispute that data with the credit bureaus.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.

5 Tips if You’re Facing Court Action from a Debt Collector

 

 

 

Comic by Dan Gibson @ DestroyDebt.com

 

 

Creditors can sell your debt. When your debt is sold to collectors, some might use the threat of court action to try to intimidate you in order to get you to pay up.  

Technically, it is illegal for collectors or creditors to threaten court action if they do not intend to carry through with it.  Taking you to court is time consuming and expensive for them, and there is no guarantee it will result in the outcome the creditor wants.  So typically, a court action is a tactic to get you to pay up, or to obtain a default judgment against you if you don’t respond to a summons and complaint.

Here are 5 things you should know in case you are presented with a court action.

1) Answer a summons and complaint.  If a creditor serves you with a summons and complaint, not merely a letter saying you owe debt, then you must answer within a certain timeframe set by your state laws (perhaps 10, 20 or 30 days), in order to avoid a default judgment. I’ll speak more on how to answer a summons in the coming days.

2) Know the statute of limitations. There is a time limit on how long creditors have in which to try to obtain a judgment against you for the money you may owe them.  That “statute of limitations” varies by state and type of debt.  Typically, it is anywhere from 3 years to 10 years. A creditor can use the limits in your state or the state where they are located. They will often use the state with the longest statute of limitations, because it is obviously beneficial for them. Click here for a state-by-state list of limitations timeframes for debt. 

3) Credit bureaus limits are not the same as debt statute of limitations. Federal law typically requires credit bureaus to drop negative information after about seven years from the date of your first missed payment. (There are exceptions, such as bankruptcies can stay on for 10 years, and tax liens can stay on for longer). If you live in a state with a 3-year statute of limitations on legal collection of debt, it will still show up on your credit report.  If live in a state that allows judgments to be entered for 10 years, it is possible the debt came off your credit report after 6 years.  So do not use your credit report to help you determine if you owe debt. You can use it, however, to check to see when the creditor first considered you to be delinquent.

4) Statute of limitations can start over. Please note that if you enter a payment agreement, make a payment — even a partial payment—, or promise to make a payment, you will restart the statute of limitations to day one.

5) Show up to court.  If you are sued, make sure you or legal representation on your behalf appear in court.  If you don’t, the court can issue a judgment against you for the full amount the creditor requests.  Even if you make a settlement agreement prior to court, don’t trust the debtor to notify the court that it has been settled. Appear in court for any date that was set and let the judge or trustee tell you to go home.

Statute of Limitations on Debt

Consumers often pay off debt for which creditors can no longer seek legal action because the Statute of Limitations has already expired for the account. Consumers pay off these accounts perhaps because the accounts still appear on their credit reports, they fear court action, or they simply don’t know their rights.  There are even cases of “Zombie debt” where agencies are claiming to collect a debt from years ago that one may have already paid off, or never owed in the first place.

Know the Statute of Limitations for your state or the state where a potential creditor is based.  The chart below provides links to various state laws.

 

STATUTE OF LIMITATIONS ON DEBT; STATE BY STATE

State	Oral	Written	Promissory	Open-ended Accounts	State Statute: Open Accounts
AL	6	6	6	3	§6-2-37
AR	5	5	5	3	§16-56-105
AK	6	6	3	3	§09.10.053
AZ	3	6	6	3	§12-543
CA	2	4	4	4	§337
CO	6	6	6	3	§13-80-101
CT	3	6	6	3	§52-581
DE	3	3	3	4	§2-725
DC	3	3	3	3	§12-301
FL	4	5	5	4	§95.11
GA	4	6	6	6 **	§9-3-25
HI	6	6	6	6	HRS 657-1(4)
IA	5	10	5	5	§614.5
ID	4	5	5	4	§5-222
IL	5	10	10	5	735 ILCS 5/13-205
IN	6	10	10	6	§34-11-2
KS	3	6	5	3	§84-3-118
KY	5	15	15	5	§413.120
LA	10	10	10	3	§3-118
ME	6	6	6	6	§5-511
MD	3	3	6	3	§5-101
MA	6	6	6	6	c.260, §2
MI	6	6	6	6	§600.5807
MN	6	6	6	6	§541.05
MO	5	10	10	5	§516.120
MS	3	3	3	3	§15-1-29
MT	3	8	8	5	27-2-202
NC	3	3	5	3	§1-52(1)
ND	6	6	6	6	28-01-16
NE	4	5	5	4	§25-206
NH	3	3	6	3	382-A:3-118
NJ	6	6	6	3	25:1-5
NM	4	6	6	4	§37-1-4
NV	4	6	3	4	NRS 11.190
NY	6	6	6	6	§2-213
OH	6	15	15	6	§2305.07
OK	3	5	5	3	§12-3-95
OR	6	6	6	6	§12.080
PA	4	4	4	4	§5525
RI	10	5	6	4	§6A-2-725
SC	3	3	3	3	SEC 15-3-530
SD	6	6	6	6	§15-2-13
TN	6	6	6	6	28-3-109
TX	4	4	4	4	§16.004
UT	4	6	6	4	70-09a
VA	3	5	6	3	8.01-246
VT	6	6	5	3	§3-118
WA	3	6	6	3	RCW 4.16.080
WI	6	6	10	6	893.43
WV	5	10	6	5	§55-2-6
WY	8	10	10	8	§1-3-102

** Georgia Court of Appeals came out with a decision on January 24, 2008 in Hill v. American Express that in Georgia the statute of limitations on a credit card is six years after the amount becomes due and payable

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.