Traveling through tough times

Surviving tough times is not a one time event or activity. It is a process that takes focus, effort, openness to change and faith. It is the faith that allows us to see beyond appearances and to remember that prosperity and happiness are available for us when we work at it. As most of us understand, a credit record or score determines one’s credit worthiness. A person’s score, historical record of payments, and other information including one’s current amount of debt, is reported by credit bureaus. The “big three” and most commonly known for individual credit histories and scores are: Experian, TransUnion, and Equifax. The scoring differs slightly in each of the bureaus. Equifax uses a range between 300-850; Experian, 330-830, and TransUnion uses 150-934. Your actual number, which is supposed to be a reflection of your credit history, is referred to as your FICO score.  The standard FICO ‘cut’ score is 500. Even though you may still get credit with a FICO score of less than 500, as did many during the rise of the housing bubble, it is rare during this current fiscal turmoil, and will remain so for some time to come. When you mix a low score with race or ethnicity, the odds against getting credit are tremendously high. Even if you are somehow successful at getting new or extended credit with a sub-500 FICO, you will generally pay exorbitant interest on any non-prepaid credit card, car payment or home mortgage.  Most Americans, particularly those of color, are divided into three categories regarding this credit situation: Those of us who fell off the credit train and who exist more or less permanently below a 500-level FICO; those who hover somewhere middling between 500 and 600; and those who are 600 and 700-level folk. For the first category, though it may look hopeless, it’s not. That group too can and must survive these tough times, and in the next article in this series, I will give some specific forward moving advice to that group, including how to do community microfinancing and microcredit. The second category needs to follow the advice below, since your continued marginalization will partially depend on how hard you are willing to work to overcome your disadvantages. Let it be said here that you can surely both survive and transcend. The third group, while clearly close to the mainstream in terms of getting back into the fast track or in staying there, needs to also follow the advice below since you are in a very iffy period right now. Good credit is great, but you always lose 50-150 points just because of the financial blacklining, redlining and clotheslining that still occurs, Barack Obama or not.  1. Since everyone, no matter how awful your credit score gets one free credit report a year, go on line www.annualcreditreport.com or call 1 (877) 322- 8228 to request a copy. You may also request a copy if you are prevented from buying or turned down for credit because of your credit history.  2. ALWAYS request your credit report and review it at least once a year preferably twice a year. Challenge any incorrect information and demand that it is changed, and follow through to make sure it is. Offer a written explanation if there are special circumstances regarding a debt or late payments.  3. Don’t just accept late payment notices. They hurt your credit record and score, and are especially used against those with otherwise good credit reports. There are occasions where a late payment cannot be avoided, and if so, call the company and let them know the payment will be late. Ask whoever you talk to, put that you called on your file account. On the other hand, when a payment is incorrectly credited to your account so it is outside of the grace period, challenge it and get it off. This is no time to be a shrinking violet where your credit is concerned. Documented late payments because of slow mail, slow processing by the creditor, a holiday, a clerical or administrative mistake, should also be contested. Go to war to protect or enhance your credit.  4. Do not be satisfied when, as a courtesy, the late fees are waived. Waiving the late payment fee does not, by itself, protect against higher interest charges, credit down grading, and reductions in credit lines. The individuals with the authority to waive the late fee may not have the discretion to correct an error and often do not have the authority to keep harmful information from having a negative effect on your credit score. Demand that the late fee explanation be put into your file. Why should you be bothered with all of this ? There are at least five good reasons.  1. The lower your credit worthiness the higher the cost of money. 2. The lower your credit worthiness the more difficult it is to receive credit to take advantage of discounts, bargains, or lower cost services. 3. If you are having financial difficulties, a poor credit score reduces your options and the ability to get assistance. 4. Bad credit follows you for years and limits your options and will continue to be costly. 5. Your credit report is most often used to judge you, your trustworthiness and your character, and may prevent you from getting a checking account, a job, a rental or house, health insurance or medical care. TTT – Tough Times Tip: Upon request there are times when an institutional representative as a courtesy gesture or to amend a mistake will waive a late payment fee. Make certain that you request that it be listed as an error on your credit record and if appropriate, listed with the credit bureaus. Waiving the late fee without addressing the impact on credit may result in a write down or decrease in the amount of your credit line including the lines of unrelated credit cards. Simultaneously, over-the-limit fees and penalties can be levied. Remember, request the employee ID number and contact information of each person you speak with and do it at the beginning of the conversation. Be assertive: It’s about controlling what you can to keep moving forward.