Tips for couples: Preparing to buy a home

Spring has sprung! And so has the peak of home buying season. As the weather gets warmer and the flowers begin to bloom, many of us suffering from cabin fever from a long winter find ourselves experiencing House Fever too.

Are you and your partner considering buying a home this year? If so, you must have some important conversations about your finances and credit health before meeting with your mortgage loan officer.

Your home purchase is likely one of the most important and largest purchases of your life; and for that reason it can be stressful on your relationship. Having healthy credit and being able to get a great interest rate on your mortgage can save you a lot of money on interest costs and make your house payment much easier on your monthly budget. Working cooperatively with your partner through the process can alleviate the stress of what is often an arduous journey. Here is how I coach couples to prepare when they tell me they want to buy a home:

1. Talk about your credit and any potential issues before meeting with a banker. If you and your partner have never really talked about your credit histories, now is the best time to start. Invite your partner to a private ‘meeting,’ free of distractions, where you can both share the best and worst of your credit histories. End the meeting with a plan to pull and examine both of your credit reports. And remember, married or not you each have separate credit reports from each of the three credit bureaus.

2. Pull your credit reports and FICO® Scores before the bank does. If you or your partner have ever had any credit problems, you know how stressful it can be when you go to apply for a new credit account. To alleviate this stress, know what’s on your credit reports and know your FICO Scores before you go. myFICO credit products now include a set of additional FICO Score versions that includes the FICO Score versions that are most widely used by mortgage lenders. Knowing where you stand before you apply for a mortgage has never been easier.

3. Address any known credit issues. After examining your credit reports together, highlight any errors or issues that need to be addressed. Contact the creditors and request documentation of any corrections or payoffs from each creditor. Keep good notes of conversations you have with these folks. Notify the credit agencies as well if you find any errors. Have all of your documentation with you when you go to apply for a mortgage.

4. Know what you can afford. Before you and your partner visit a mortgage loan officer, agree together on how much you want to spend on a home. You may want to speak to a financial advisor or your accountant for help with your budget. There are several payment calculators online that can help you calculate mortgage payment. Do not let shopping around for a home and finding a dream home with a larger price point distract you. Be smart and stick to your plan. How much can I afford?

5. Get a prequalification letter from your lender. If it’s available to you, request a prequalification letter from your lender which states how much mortgage you qualify for based on an initial credit check. With a more competitive home buying environment expected this year, you can show sellers and realtors that you are serious buyers by having a prequalification letter with you.

The bottom line is that it’s important to keep the lines of communication open with your partner all through the home buying process. It can be a stressful and exciting time, and the more united you and your partner are the more fun the process will be.

Happy house hunting!

The scores that count in mortgage lending

So you consider yourself a well-informed consumer. You have been educating yourself about credit scores, the credit process and how lenders evaluate credit for mortgage loan applications as you are getting ready to purchase a new home. And you already know that understanding your FICO Scores is really important as they are the credit scores most commonly used in the mortgage loan review process.

You’ve pulled your FICO® Scores and credit reports at myFICO to see where you stand, but are not sure on which FICO Score versions you should focus.  Do mortgage lenders use FICO® Score 8 from all three credit bureaus? Or FICO Score 8 from one and FICO® Score 5 from another? I know, it can be kind of confusing.

Let me explain …

When you access your credit report and FICO Scores at myFICO, you now get access to more than one FICO Score version.  That’s because different lenders may be using different versions of the FICO Score in their credit review processes and we want to make sure you are getting access to the FICO Score version your lender is likely using.

Why are there multiple versions?  It boils down to two main reasons:

1. FICO Scores have been an important component of most lenders’ credit criteria for the past 25 years.  Over that time we have periodically updated the FICO Score mathematical formulas several times to keep them up to date and to maintain their predictive power.  It’s similar to how there are multiple generations of smart phones in use today.

2. There are FICO Score versions tailored for select types of credit such as auto and bankcard (i.e. credit card) lending.  If you are applying for a car loan or signing up to get a credit card, there is a good chance the lender is using one of these tailored score versions

Each lender determines what FICO Score version they will use in their credit evaluation process.  Generally speaking, in most cases you likely won’t know what version a lender is going to pull when evaluating your credit request.

However, in mortgage lending it’s less confusing.  It is highly likely that the following FICO Score versions will be pulled on all mortgage applicants and from all three credit bureaus.

• FICO Score 5 based on Equifax data
• FICO Score 2 based on Experian data
• FICO Score 4 based on TransUnion data

Sometimes you may see or your lender may reference these versions in slight variations to the list above.  For example, Fannie Mae’s web site references them as follows:

• Equifax Beacon 5.0
• Experian/Fair Isaac Risk Model V2SM
• TransUnion FICO Risk Score, Classic 04

As you can see, there are some differences, but most industry references to the FICO Score versions commonly used in mortgage lending will have the appropriate version 5, 2 and 4 version number to the corresponding credit bureau listed.

Hope this provide some clarity.  You can now focus on those mortgage related versions in your FICO Score explanation report with confidence knowing they are the same versions your mortgage lender will likely access in the mortgage loan review process.

5 Habits of Successful Savers & Investors

Successful saving and investing takes time and persistence. To have the money in your budget each month for savings and investment goals takes an ongoing financial commitment.

If you’re learning how to make that financial commitment stick, consider these five habits of successful savers and investors.

1. They Set Aside Today’s Money for Future Goals

Successful savers and investors think ahead. They don’t just live for today and let tomorrow sort itself out. They put financial capital toward savings and investing goals that are important to them — retirement, paying for a child’s education, etc.

2. They Stick to Their Goals

A key to successful saving and investing is consistency. They stick to their savings and investing goals month after month and year after year. Savings is a given in their monthly budget and they know it is an essential part of meeting future financial goals.

3. They Plan for Emergencies

Successful savers and investors know that financial emergencies happen. And they have money set aside for these occasions.

Three to six months’ worth of living expenses is a good savings goal for an emergency fund.

But even having a couple thousand dollars tucked away in a savings account can make a big difference to staying on track with finances when a large financial expense comes your way.

4. They Pay Themselves First

Successful savers and investors put their savings goals first. Before anything else, money from their paychecks gets put aside for saving and investing – 10% is a good starting point.

Depending on their income and other financial commitments, some savers and investors are able to dedicate 25% of their income and even more to saving and investing.

So get in the habit of saving first. Whenever that money from a paycheck hits your checking account, move a chunk to savings and stick with this pattern month after month. Consider saving before the money hits your checking account by joining an employer’s 401(k) plan and having pre-tax money set aside for retirement.  Opening an individual retirement account is another good saving and investing option.

5. They Live Below Their Means

Successful savers and investors live below their means. If they spent every penny that they earned, they wouldn’t have the money to set aside for future goals.

To be a successful saver, you must spend less than you earn on a consistent basis.

If on the other hand, you are spending beyond your earning capacity and monthly income, you will accumulate debt, making it more difficult for you to save.  You also risk damaging your credit if you overextend yourself on debt and fall behind on your payments. 

When you borrow, you must pay back all that you borrowed and all the accumulated interest and finance charges owed to lenders.

Borrow too much and the money that could be put aside for savings and future goals gets paid to lenders instead. To see just how much the money you are borrowing is costing you, use this lifetime cost of debt calculator.

What’s a Credit Privacy Number?

If you’re worried about identity theft or have recently had your Social Security number compromised, you may want to consider a credit privacy number.

A credit privacy number is a nine-digit identification number that can be used instead of a Social Security number in some instances. Like a Social Security number, you can receive only one credit privacy number.

With a credit privacy number, also called a credit profile number, you can apply for and receive credit from lenders and your credit transactions will be reported to the credit reporting agencies. But you will still need to use your Social Security number to register a motor vehicle, apply for a government loan and submit documents to the Internal Revenue Service.

Credit-wise, you are responsible for all the debts that you incur with a credit privacy number and your Social Security Number. So manage your debts wisely.

How to Get a Credit Privacy Number

A credit privacy number is free, but it is best to consult with an attorney when requesting one. An attorney can file a request for a credit privacy number with the Social Security Administration.

Applying for a credit privacy number takes time, so this isn’t a quick fix.

Watch Out for Scams

Beware of companies that want to sell you a credit privacy number on the promises of a fresh start with easy access to credit and an escape from bad debts.

They may be selling you a stolen Social Security number instead. Scammers often use Social Security numbers stolen from children for this purpose. And you could actually be committing identity theft if you apply for credit using a stolen Social Security number.

If you’re worried enough about identity theft to request a credit privacy number, you should also consider monitoring your credit regularly. You can get your credit reports for free once a year under federal law.

CREDIT NEWS: New Policy at America’s Biggest Banks Could Help a Million People Improve Their Credit Score

Bank of America and JPMorgan Chase, two of the nation’s largest banks, will update consumers’ credit reports to remove debts that had been eliminated in bankruptcy, the New York Times reports. Such bills often remain on a consumer’s credit report, despite being legally discharged and no longer owed, and they can seriously damage a consumer’s credit standing.

The plans to update credit reports came in the midst of lawsuits playing out this week in Federal Bankruptcy Court in White Plains, N.Y., against Bank of America, Chase, Citigroup and Synchrony Financial (formerly GE Capital Retail Finance), the Times reports. Prosecutors allege the banks ignored bankruptcy discharges to make more money when selling off bad debts, and if customers complained about the information on their reports or that they were being pursued for the debts, the suit alleges the banks would refuse to fix the credit reports unless the debts (which the consumers don’t owe) were paid.

Bankruptcy is often a last resort for a heavily indebted consumer, but as damaging as it can be to have a bankruptcy on your credit report, it can be the best way to move on from credit problems and get a fresh start. However, if the debts wiped out in bankruptcy continue to be reported as past due or charged off, it’s harder to get that fresh start.

According to court documents, Chase and Bank of America have agreed to make sure debts discharged in bankruptcy are properly recorded as no longer owed on credit reports, the Times reports. The banks have not admitted wrongdoing. The changes could potentially help about 1 million consumers’ credit.

“The bank believes that its reporting on sold credit card accounts to credit reporting agencies is accurate and consistent with credit reporting agency policies,” wrote a Bank of America spokesperson in an email to Credit.com. “However, given the issues raised by the Court, we have made the decision to delete credit reporting for the sold credit card accounts.” Chase declined to comment.

Synchrony Financial also agreed to offer similar changes for consumers last year, if temporarily, according to the Times.

Negative information on credit reports can disrupt many areas of your life. Some employers run credit checks on potential employees, so negative information can jeopardize a consumer’s job prospects, which can cause all sorts of financial problems. On top of that, a utility provider or other service company may require you to pay a deposit to open an account if you have poor credit.

Given how much impact your credit standing has on your daily life, it’s important to keep an eye on it for errors, so you don’t unfairly experience the consequences of bad credit. 

7 “Smart” Credit Tips That Aren’t

There’s a lot of advice floating around out there about how to manage your credit cards and other debts to maximize your credit score. The trouble is, not all this wisdom is created equal, and some tips intended to help your credit can actually have the opposite effect. Here are seven supposedly “smart” tips we’ve heard bandied about recently that generally ought to ignored.

Asking for a lower credit limit

If you can’t control your spending, asking for a lower credit limit may indeed keep you out of trouble by simply capping how much you can borrow. But there’s also a risk to this approach. As MyFICO.com explains, 30% of your credit score is based on how much you owe. The formula looks at how much you owe as a percentage of how much available credit you have, otherwise known as your credit utilization ratio. So if you’re unable to pay off your debts, lowering your credit limit will increase your ratio — and damage your score. The impulse to impose external limits on your spending is understandable, and in some cases wise, but you’re better off focusing your energy on internal restraint.

Paying off an installment account early

Paying off debts early might seem like a good way to improve your credit, but paying off an installment loan like a car loan early can actually ding your score because it raises your utilization ratio. For instance, if you have a $10,000 car loan with a $5,000 balance that you pay off in one fell swoop, your debt load will drop by $5,000, but your available credit will drop by $10,000 once the account is closed.

This isn’t to say you shouldn’t pay off a debt early if you find yourself with a windfall on your hands. An earlier payoff can save you a bundle in interest. But if you’re trying to raise your credit score, paying off a credit card rather than an installment loan is the way to go.

Opening a bunch of cards at once

Since your utilization ratio is so important, a lot of people think that getting as much available credit as possible — immediately — will do the trick. But it doesn’t work like this, unfortunately. You can’t magically improve your utilization ratio by applying for a slew of cards in rapid succession because numerous inquiries and multiple brand-new cards both can lower your score, says Barry Paperno, credit expert at Credit.com. If you want more credit to improve your score, space out the process and be realistic about your situation; don’t take the hit to your score by applying for a card you know you probably won’t qualify for. (Banks and third-party websites that aggregate credit card deals both generally spell out what kind of credit score you need to obtain a particular card.)

Settling a debt for less than you owe

Negotiating with a lender and then settling the debt for less than you owe can be a smart move. But it can also hurt your credit if you do it the wrong way. You must get the lender or collections company to agree in writing to report the debt as “paid in full;” otherwise, it will be noted “settled for less than the balance.” It sounds like a small distinction, but having a debt — even a paid debt — listed as “settled” on your credit record can hurt your credit score, says Natalie Lohrenz, chief development officer and director of counseling at Consumer Credit Counseling Service of Orange County.

Using prepaid debit cards to rebuild your credit

John Ulzheimer, president of consumer education at SmartCredit.com, says a lot of borrowers have the misconception that prepaid debit cards and credit cards are equally good credit-building tools. They’re not. Prepaid cards “don’t do anything to help build or rebuild your credit and are not a viable long-term plastic solution,” he says. Although some prepaid card issuers say they help build credit, none currently report to the three major credit bureaus.

Instead, Paperno suggests a secured credit card, which requires you to put up a cash deposit equal to the amount you can spend. The effect on your cash flow is the same as with a prepaid card, but you’ll be building a credit history. That said, there two caveats to keep in mind. First, although most secured card issuers do report your activity to credit bureaus, check the fine print or call and ask to make sure it reports to at least one of the big three (TransUnion, Equifax or Experian). Second, watch out for fees; in a March ruling that disappointed consumer advocates, the Consumer Financial Protection Bureau reversed a regulation that limited some fees on these cards.

Never using your credit cards

Some people approach credit like a poker game, with the mentality that you can’t lose money if you don’t play your cards. Although it’s always advisable to pay off your bill in full every month to avoid interest charges, not using credit cards at all can actually backfire when it comes to your credit score. If an issuer looks at your account and sees that there hasn’t been any activity for a while (how long varies, but more than a year is a good rule of thumb), they might close it. Losing that credit line hurts your utilization ratio, which can hurt your credit score. Lohrenz suggests charging a small amount regularly — maybe a recurring bill like a gym membership or Netflix subscription — and paying it off every month. Some issuers will let you set up automatic payments from your checking account, so you won’t forget to make those payments.

Checking your credit daily

Checking your credit score every day won’t hurt your score (when you request your score, it’s called a “soft pull,” which is different from the “hard pull” lenders conduct that does affect your score). But trying to parse why you gained or lost two points here or there will just give you heartburn and won’t give you any greater insight into how your score is calculated. Lenders generally report to credit bureaus every 30 days, so checking your score every day takes the focus off what really matters: how your longer-term financial habits affect your credit file.

What Does a Mortgage Do to Your Credit Score?

One of the best financial decisions you can make is to purchase a home. Although the recent housing bubble reveals that buying a home can be risky, there are still many benefits to owning your dwelling. Particularly if you plan to live in the same area for an extended period, buying a home can save you a significant amount of money.

When you decide to buy a home, will acquiring a mortgage hurt your credit score?

The Mortgage: A Necessary Evil

Of course, the less debt you have, the better. However, most of us would have to work for many years before we could save up the $150,000+ necessary to buy a home. Meanwhile, the entire time that you spend saving up, you are paying out $800+/month for rent. Thus, once you can afford the 20% down payment, purchasing a home is generally a wise financial decision.

The impact of a mortgage on your credit score varies based on your ability to pay off the debt consistently. Fortunately, for someone who affectively manages their finances, a mortgage is beneficial. Meanwhile, for someone who fails to pay their bills regularly, a mortgage can have a tremendously negative impact.

When a Mortgage Can Hurt Your Credit Score

After the Initial Inquiry: When you first apply for a mortgage, you should plan on your credit score dropping slightly. The number of banks that pull up your credit report makes no difference – provided all of the inquiries occur within a 30 day period. Although an initial drop may happen, you can anticipate your score fully recovering, or even going higher, within 6 months to a year.

When You Miss Payments: A missed mortgage payment, or worse, a foreclosure, will remain on your record for seven years – making it incredibly difficult to find future lenders. Missing any payment lowers your credit score, but mortgage payments can have an even more significant impact due to their size and importance.

When You Open Additional Credit: Avoid signing up for new credit cards or borrowing for a vehicle within a year of getting a new mortgage. Lenders recognize a mortgage as an expensive commitment that greatly limits your finances. Therefore, opening up additional lines of credit can make banks nervous that you will not be able to manage all of your accounts.

How a Mortgage Can Benefit Your Credit Score

In short, a mortgage benefits your credit score when you pay your bills on time and in full. As time goes on, a mortgage payment reveals that you are capable of handling debt – which will increase your credit score. Additionally, as 10% of your credit score is based on having a variety of debts, having a mortgage, in addition to a credit card, can slightly bump up your credit score even further.

Never take out a mortgage purely for the sake of improving your credit score. If you don’t need a mortgage to buy your home, then you are in an enviable financial position. However, if you are debating between taking out a mortgage or saving up until you have the full value of your home, you should not feel uncomfortable borrowing to purchasing your home.

How Much Of Your Credit Card Limit Should You Use?

It can be exciting when, signing up for a new credit card, you discover that the bank is offering you a higher borrowing limit than you first anticipated. Recognizing that, with your three credit cards, you could borrow half of your annual salary is exhilarating. However, just because a credit card allows you to borrow $10,000 doesn’t mean that you should.

Maxing out your credit card is not only harmful for your financial position, but also for your credit score. Although making faithful payments is an essential aspect of maintaining your credit rating, leaving no wiggle room for emergencies suggests a failure to manage your finances intelligently – which will hurt your credit score.

The Best Debt-to-Limit Ratio to Maintain a High Credit Score

The smartest credit card decision is to pay off your entire bill every month. Because of the exuberant interest rates that credit card companies charge, every month that a balance remains on your card can significantly reduce your future financial position.

However, if you must retain a balance on your credit card, it’s best to keep the balance below 25-40% of the borrowing limit of your card. Therefore, if you have a $5,000 credit limit on your card, keep your balance below $2,000 to protect your credit score from being damaged.

The Benefits of Maintaining a Low Balance on Your Credit Card

Financial institutions are more willing to lend to people who have proven that they are able to effectively manage their budgets and debt. Therefore, when you are permitted to borrow up to $30,000, but keep your balance at $10,000, you demonstrate self-control and discipline – giving financial institutions more confidence when lending to you.

In addition to maintaining your credit score, keeping your credit balance low provides a financial cushion in case of an emergency. Although you never want to use all of your credit limit, if an unforeseen circumstance arrives, having room to borrow more can make the difficulty much easier to overcome. Having maxed out credit cards, and then losing your job, can make bankruptcy almost inevitable. However, if you are able to borrow enough to cover living expenses for another few months, you can provide for yourself and your family until you are able to secure another job.

One Card vs. Many Cards

Some financial gurus suggest that, if you find yourself with extensive credit card debt, you should transfer all of that debt to a single card and cancel the rest. There are pros and cons to this decision.

There are a couple of benefits to placing all of your debt on one card and cancelling the others. Firstly, you can protect yourself from your own lack of self-control. If you are unable to keep yourself from maxing out your credit limit, transferring your debt to one card will prevent you from continuing to overspend. Secondly, if one of your cards has a much lower interest rate than the others, transferring your debt can result in significant savings over time.

However, if you can control your spending and all of your cards have similar interest rates, it is far better to maintain several credit cards. Firstly, it’s better to keep your balance below 40% of your credit limit for each one of your credit cards. If all other things are equal, splitting your balance between two cards to keep their balances far under half of the cards’ credit limits will keep your credit score higher. Additionally, by keeping all of your credit cards, you maintain a safety net in case of an emergency. Having the opportunity to borrow more can alleviate many short-term pressures that can come from a lost credit card, a car failure, or an urgent trip to see a sick relative. Therefore, if you can control your spending habits, maintaining multiple credit cards will keep you in a more financially secure position.

Paying Off a Collection Account

Settling Old Accounts

If you want to make wiser use of credit, then negotiating a settlement for any past due amounts can help you in developing the right mindset for avoiding future debt. However, before you take action, you will first need to determine if the debt is still legally owed and, if so, the best payment method to use.

Check the Statute of Limitations on the Account

First, verify that an old collection account has not legally fallen outside of the statute of limitations. If you pay any part of a debt that is no longer considered due and payable, then the action is considered as an admission of the debt and therefore will restart of statute of limitations for the account. State statutes of limitations vary, so you need to look up the guidelines for your State If the debt is past the statute of limitations then negotiate hard with the collector by submitting a written proposal for 10% or less on “original” principle amount.

Types of Past-due Accounts

Accounts can be classified as:

• Written contracts
• Promissory notes (Similar to a written contract, but the loan terms are spelled out, such as those represented by a mortgage)
• Open-ended accounts or credit card accounts 

Avoid Being the Target of a Scam: Does the Collector Work for a Credible Company?

Before you pay any amount too, you want to make sure the collector works for a bona fide agency and that you are not a target of a scam. When agreeing to a settlement then, ask for verification of the debt in writing. Follow up by contacting the Attorney General’s office in your state to determine if the agency is licensed. If licensure is not a requirement, then call the BBB (Better Business Bureau) to make sure that the agency is registered.

Don’t Fall Prey to Any Undue Pressure

Collectors sometime pressure consumers in utilizing payment methods that they are not comfortable about using. If you run into this issue and you need some time to determine which payment method to use, don’t fall prey to the pressure. Take notes of your conversation and do not pay the amount until you figure out which method works best for you.

How Will the Money be Used?

Before allowing a collector to collect on an account, ask that the terms be put in writing. Have the collector fax, mail or email a letter which contains the accepted payment amount and which outlines how the money is going to be used. For instance, will the money be used to remove the overdue balance from your credit history or to pay off the account in full? Make sure the collector states the amount to be paid will satisfy “all” claims on the debt.

Keep Any Backup Documentation

Regardless of the payment method you choose to use, make sure you keep copies of the paperwork for the payment (such as receipts, checking account records, and statements). Keep the documentation for several years to prevent any issues that may later surface.

Make Sure the Amount was Recorded

Once you do make payment for a past due account, always plan to follow up to make sure that the amount actually went through and was applied and recorded to the settlement. If you can afford to do so, pay an attorney to have the amount sent via a law office check.

Pay by Paper Check

Don’t pay a collector by having the amount electronically taken out of your checking account if you can help it. You have more control by using the old-fashioned method of paying by check. Plus, you can send the check by certified mail to make sure of its receipt. The cancelled check can also serve as proof that you paid the balance on the account. 

Never Replace an Old Debt with a New Debt

Also, never ever pay a debt with a credit card – a practice that will place you further into debt. If you are unable to pay off an old debt without acquiring new debt, then it is in your best interest to seek credit counseling or advice from a bankruptcy attorne

How Your Credit Score Can Affect Employment Opportunities

It’s common knowledge that your credit score is a determining factor in securing a loan or mortgage, but did you know that a bad credit score can make your job hunt more difficult?

When an employer does a background check, they may also request that you give them permission to pull your credit report. Although these background checks are not done until the company has decided that they want to hire you, any surprises that may come up, including a poor credit score, are acceptable grounds for refusal to employ.  How do you compare to other hiring candidates? Click here to see your Hiring Risk Index.

Reasons Why a Bad Credit Score Worries Employers

There are several reasons why a bad credit score can make securing a job more difficult.

Firstly, if your job involves managing any kind of finances for the company, it is obvious that poor personal financial management will raise concerns. If you are unable to manage your own salary and expenses, how can a company expect you to manage a multi-million dollar budget?

Furthermore, there is typically a correlation between a credit score and job performance. Often times, failure to manage one aspect of life roles over into other areas. Someone who forgets to pay their bills on time may also show up late to work, forget about meetings, and fail to return customers’ calls.

Sometimes bad credit is the result of difficult life circumstances – such as a foreclosure or divorce. For someone who is still dealing with these issues, it may be difficult to spend the amount of time focusing on work that the employer believes is necessary. If an employer believes that the personal issues that have affected your credit score could also affect your ability to work, they may be hesitant to hire you.

How to Prevent a Bad Credit Score from Costing You a Job

There are several steps you can take to ensure that your credit score doesn’t hurt your chances of getting the job.

The obvious first move is to work hard to keep your credit in good shape. If you maintain a high credit score, then you can be confident that, if anything, your credit score will impress your future employer.

If there was one specific even that majorly influenced your credit score, try to get a note on your credit report that explains the reasoning behind it. Having an explanation on your credit score can tremendously reduce the negative impact.

Finally, ask your future employer about what the background check will entail. IF it does include a credit check, take the initiative to tell your employer what they might find – and offer an explanation. Although it can be awkward to talk about your personal credit score – making an effort to explain things will prevent a potential employer from misunderstanding the impact that your score could have on your work performance.

Take the initiative to monitor your credit score, repair your credit score, and explain discrepancies or issues in your credit score. By taking control of your credit score, you’ll prevent your credit score from controlling your future.