The Wrong Side of the Credit Road

A few years ago, my dad was headed to my grandparents’ farm.  That trip involved about a mile and a half of hilly gravel road.  As he crested the top of the tallest hill, he met an oncoming vehicle that was traveling square down the center of the road.  If you drive gravel roads at all, you know that’s a bad place to be on a hill.  My dad was to his right and the other driver swerved to their right, nearly missing my dad.  She went over the top of the hill in her direction and he went on in his own direction.

A short time later, the sheriff’s deputy showed up in the farmyard and started asking my car accidentdad a lot of questions.  As it turns out, the other driver in his near-miss had gone in the ditch and rolled her car after crossing the top of the hill.  She was claiming that some madman had run her off the road.  After my dad quickly explained his version of the story, the deputy assured him he shouldn’t have any trouble.  “We know her.  I’d believe your story.  She has a history with us.”

That was the last my dad heard of the incident.  A driver had gone off the road, rolled her car, and claimed it was my dad’s fault.  And he never heard anymore about it.  Why?

It’s all about the history.

As you might expect, we see quite a few clients who are struggling to rebuild their credit history.  “But, I don’t plan on buying a house any time soon (if ever),” people argue.  “And I’m fine driving old cars that I pay cash for.  I don’t need to worry about my credit.”

Let’s talk about who all uses your credit report:

  • Lenders – Anyone looking to lend you money, even for a simple credit card.
  • Landlords – They want to know your payment history and if you are likely to pay rent on time.
  • Service Providers – From utilities to cell phone companies, they also want to know the likelihood of getting paid.
  • Employers – Current and potential, if you are going to be handling their money, they want to know what level of temptation you may have to help yourself.  More and more, they are also checking the credit history of employees’ spouses.
  • Government Licensing – looking to get a professional license that the state issues?  They’ll want to know your history first.
  • Insurance Companies – It’s all risk management for them and your credit report is one way they will evaluate that.  Better history, lower insurance payments.

Yep.  Even if you don’t plan on getting a loan, there is a lot riding on your credit report.  This is probably something you should pay attention to.  If your credit report needs some attention, there are a few ways you can go about doing that.  Let’s take a look at your options:

Do it yourself

To be completely transparent, ANYTHING that can be done to fix your credit report, you can do yourself for free.  Go to AnnualCreditReport.com to get your free credit report.  There are even links right in the online report to begin the dispute process for any negative items that are old or incorrect.  It very well may take more work than that to get everything straightened out, but you certainly can do it yourself for free.

Non-Profit Counseling

This is where we come in.  In a credit report counsel, we pull your credit report and then educate you on what it says, what it means, and what you can do to fix it.  We aren’t going to do it for you, but we will give you direction and accountability if you like.  We can also help with budgeting as fixing your credit report is probably going to take some extra money.

While costs between agencies may vary, our cost for a credit report counsel is $35, although if you are looking to buy a home, we have grant funds available from Wells Fargo to cover the cost of your appointment.

Credit Repair Company

Still overwhelmed with the whole process?  There are for-profit companies that will take your information and do all of the work for you.  They will take care of disputing items and filing paperwork to clean up your report.  Just be aware that, while it is the highest level of service, they are for-profit and will charge you for that service.  We have had clients come to our office after paying $1,000 or more to such a company.

Which ever direction you choose to go in repairing your credit, remember that anything that can be done to fix your credit can be done by you for free.

If you would like to know more about your credit report or how credit works, the counselors at the Center for Financial Resources would be happy to help.

Just remember – your future is counting on you having your credit report on the right side of the road.  Start repairing it now before you have your own near-miss.

written by Breck Miller
image courtesy freedigitalphotos.net

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