Can Bad Credit Ruin Your Job Search?

Have you ever applied for a job and wondered if your bad credit would affect the outcome? Pre-employment credit checks aren't that uncommon these days. 

According to a survey released by the Society for Human Resource Management in 2010, 13 percent of the companies surveyed check the credit reports of all candidates and 47 percent check some candidates.


Should you be worried if you have a poor credit history?

Employment-related credit checks are legal in most states, but there are limits to what employers can see and how they can use your credit information. Here's what you need to know about credit reports and your job search.


Contrary to popular belief, employers can only see your credit report not your credit score. Credit reporting agencies do not provide your credit score to employers as part of the pre-employment screening process. "Credit scores are sold along with credit reports, but they are not the same thing," says John Ulzheimer, the president of consumer education at SmartCredit.com. 

Your credit report offers an overview of how much debt you have and whether you pay it on time, while your score is a number that represents your credit risk, usually between 300 and 850, based on this information. Under the Fair and Accurate Credit Transactions Act, all Americans are entitled to a free credit report, but not a free credit score, from each of the three major credit reporting agencies once every 12 months.


According to Mike Aitken, director of government affairs for SHRM, employers look at long-term trends, not whether you missed a loan payment or forgot to pay your Visa bill a few times. "They're looking to see if the person can handle their personal finances," he says. "In particular, they care about when things go into default or judgment." As Ulzheimer says, things get messy when collectors start calling the office or trying to garnish wages, so employers want to avoid those situations.


Before an employer can view your credit report, they need your permission in writing. That's a requirement under the Fair Credit Reporting Act. Once you grant permission, Ulzheimer says employers generally buy that information, along with a criminal background check and other information, from third-party screening companies. Aitken say it can cost employers upward of $200 to run background checks on each applicant, so they'll usually wait until they're almost ready to make a job offer. And unlike other credit inquiries, employment inquiries do not impact your credit score.


You could deny a prospective employer permission to view your credit report, but the company might not hire you without this information. Under the Fair Credit Reporting Act, before the employer makes an adverse decision based on your credit report, such as denying your job application, the employer must tell you and provide a copy of the credit report. They are not required to give you the opportunity to explain your bad credit, but SHRM's study found that 65 percent of employers say they give candidates the opportunity to explain the contents of their credit report before making a hiring decision. If you have serious credit issues, Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling in Washington, D.C., suggests being upfront about it. "I would be truthful and say succinctly what happened that caused your financial hiccup and how you intend to pull out of it," she says, adding that consumers can contact credit bureaus and electronically submit a 100-word explanation to accompany their credit reports.


Some states have or are getting stricter on pre-employment credit checks. An Illinois law took effect in January that outlaws employment-related credit checks except in a few very specific instances. Hawaii, Oregon and Washington already have laws limiting this practice. And 25 states have bills pending in the 2011 legislative session, according to the National Conference of State Legislatures. "In these economic times, with millions of people having a foreclosure or bankruptcy on their record, employers are going to have to rethink the relevance of a credit report with respect to a job applicant," says Cunningham.


Aikten knows of a few cases where a company chose not to make a job offer based on the findings of a credit check. In one case, a company discovered that a prospective CFO had tens of thousands dollars in gambling debt, so they felt a fiduciary responsibility to find someone else. But he stresses that credit reports are rarely the deciding factor. "Just because somebody has a bad credit report doesn't mean they'll embezzle or steal," says Aitken, "but it is a factor along with work experience, certification requirements and character references. It's one piece of the pie."


If you think you're home free once you land a job, think again.

"Ask anybody in the military who's lost their clearance," says Ulzheimer. "It's not terribly common, but you can lose your security clearance if you start to have collections issues." According to the 2010 SHRM survey, almost 20 percent of employers conduct ongoing credit and/or criminal background checks post-hire on employees working certain jobs, such as those with access to confidential information, and 5 percent do them for all employees. Some firms perform credit checks before granting a promotion or a change in status and some do so annually.

All the more reason to continually monitor your credit report and work to clear up any issues, as corrections won't happen overnight. Just as you shouldn't wait until you're applying for a car loan or a mortgage to think about your credit report, you shouldn't wait until you're asked to share your credit report with potential employers.

"People say 'I don't care what my credit report looks like, because I'm not applying for a loan,' but what if you lose your job tomorrow?" asks Ulzheimer. "You always have to be worried (about) what's on your credit report."


John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. Follow John on Twitter.

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How Tax Liens Affect Your Credit Score

Tax day 2012 has come and gone. If you’ve already gotten your tax refund, then congratulations! And if you had to write a check, hopefully it wasn’t too painful. For those of you who blew off your taxes or decided to play games with your returns, I’d like to introduce you to the phrase: tax lien.

A tax lien protects the government’s (either state or Federal) right to claim your property if you don’t pay your tax obligations. A lien can be attached to your money or your property. When the IRS or your state’s tax authority files a lien against you they do so as a public record. This means anyone, including credit bureaus, can see the lien.

All three of the major credit reporting agencies (Equifax, Experian, and TransUnion) report tax liens on their consumer credit reports as a matter of common practice. Once a lien has found its way to your credit reports, it’s not easily removed. In fact, tax liens have the potential to remain on your credit reports indefinitely. That’s because the “seven year rule" that applies to most negative credit items does not apply to tax liens.

A tax lien is considered a serious derogatory item and can lower your FICO scores significantly. And even when the lien has been paid or settled, it still has a serious negative impact to your credit scores.

The reason…the incident of the lien occurring is what’s problematic, not the current balance.
If you do end up with a tax lien on your credit reports then you can address them one of several ways;

Settle it

This is often referred to as an offer in compromise. This is just like a settlement of your defaulted credit card debt. You make an offer to the IRS and if they deem it to be of a reasonable amount, they’ll likely accept it. Once they accept the offer in compromise they will file a release of your lien. This does not result in the lien being removed from your credit reports. It simply updates it to show as a “released” lien. At this point you can add seven years to the release date and that’s when the lien will be removed from your credit reports.

Pay it

If you don’t have any sort of financial hardship justifying the offer in compromise then the IRS is going to want you to pay your tax lien in full. Once it has been paid in full, they will file a release of lien. The above credit reporting scenario applies to these released liens.

Request a withdrawal

Last February the IRS announced a new set of policies and procedures designed to entice taxpayers to pay their liens in full rather than offer settlements. Here’s the deal, if you pay your lien IN FULL, or enter into an installment repayment program that will eventually lead to your lien being paid in full, you can petition the IRS to withdrawn your lien, rather than simply release it. You’d use IRS form 12277 to apply for the withdrawal.
If you are successful getting your lien withdrawn then it will come off of your credit reports immediately. This is because the credit reporting agencies do not report withdrawn tax liens. This option has caused confusion with taxpayers and has lead to the following questions;

Removing the lien from your credit report

The IRS didn’t put the lien on your credit reports in the first place. They just filed it as a public record, which is how the credit bureaus got it. The IRS won’t help you get the lien removed. Once the withdrawal has been approved and filed, contact the credit bureaus and let them know the lien has been withdrawn. They’ll confirm your dispute and then remove the lien.

Will this work for state tax liens?

This withdrawal policy is an Internal Revenue Service policy and does not apply to the various state tax authorities. And while I’m not versed on the tax policies of all 50 states, I have not seen an example of this working for a state tax lien.

Is the policy retroactive?

I’ve been asked if this new withdrawal option will work for liens that were filed and then paid in full before the IRS’s announced their new withdrawal policy last year. While I can’t get an answer from the IRS on that front, I have had numerous consumers contact me with examples of successfully getting old tax liens withdrawn and subsequently removed from their credit reports. So yes, it does appear the policy is retroactive at least according to the evidence I’ve seen.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. Follow John on Twitter.

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Can Your "Employment Credit Score" Hurt Your Chances At Getting A Job?

By Robert Linkonis Sr.

I’ve often defined and called out the "Myth of Credit score and Employment" as the Unicorn of the credit world—a lot of people have heard of this, but nobody has actually ever seen a case where a credit score caused an applicant to be denied employment on this factor alone ...

In trying to dispel this idea altogether, I have noted many cases - all exposed in this blog - but Suze Orman's recent campaign to promote her new Prepaid Debit Card – in which she eludes to the fact that not having a FICO score could cost consumers a job...  Whaaaaaaaaaa ???

Suzi and I have never been friends, but -- what is she telling her prospective customers?

Here's the truth: Credit scores are never sold by credit reporting agencies for employment screening purposes.

Here's how you can be sure: The only three agencies authorized to distribute credit reports are  – Equifax, Experian and Transunion. Because you can't get a credit score without first getting a report from those agencies, employers would have to go through those companies if they wanted your credit score.

And all three agencies all said the same thing. *** They do not sell credit scores to employers for screening purposes.

If affirmation from the national credit reporting agencies are not enough to convince you that credit scores ARE NOT used by employers,  the Consumer Data Industry Association, the trade association of the credit reporting agencies, confirmed the same thing: There is NO credit score provided in a credit report pulled for  employment screening.

Experian says that: "The employment credit report includes much of the information about your loans and credit cards that is listed in your credit report". BUT NOT YOUR CREDIT SCORE!!!

To pull your credit report and score, one must be a  - "financial institution" and have a -  "permissible purpose" to purchase a consumer credit report.   AN EMPLOYER IS NOT A FINANCIAL INSTITUTION WITH PERMISSIBLE PURPOSE to pull a consumer credit report that includes your credit score.  

Bottom line - a potential employer CAN pull your credit report and see all of your credit history - both positive and negative. They can use this information to make a decision on whether or not to hire you, but they can not see your credit score.

Please call anytime with all questions and ...  Always feel free to "LIKE" Credit Restoration Associates on Facebook: http://www.facebook.com/Financed1

 

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Can Debt Collectors Contact You via Social Media?

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Fantastic strategies to preempt unwanted calls or other communication from collectors:

By Susan Johnston

 

The Fair Debt Collections Practices Act (FDCPA) was designed to protect consumers against abusive practices by the debt collections industry. But when FDCPA took effect in 1978, few people could have anticipated how Facebook and Twitter would infiltrate our daily lives. In recent years, a handful of lawsuits by consumers who were allegedly contacted by collectors through social media have brought the issue to light.

One strategy collections agencies use, according to Michelle Dunn, a 24-year veteran of the debt-collection industry and author of The Guide to Getting Paid, is to set up a fake profile and try to friend someone (however, a few states have laws against online impersonation). "If you look like a really good-looking girl, a lot of people would accept a friendship even if they don't really know the person," she explains.

Dunn says she discourages this practice in her webinars on social media and collections. "I just tell them to use common sense," she says. "Don't pretend you're someone you're not. There shouldn't be any interaction."

FDCPA doesn't explicitly forbid collectors from, say, posting on your Facebook wall or tweeting your relatives to ask about your whereabouts. But according to Craig Thor Kimmel, an Ambler, Penn.-based consumer attorney who handles collections issues, the act's intent is clear. "A debt collector that posts about your debt on social media would be violating this statute very clearly because that privacy is compromised," he says.

Despite this, collectors can use information found on a social network to contact you in other ways. "Right now, the normal pre-social media method would be to use the address off the loan documents and statements, but if the consumer is unwilling to respond to the contacts or is at a different location, they can certainly use social media as way of finding the consumer," says John Ulzheimer, president of Consumer Education at SmartCredit.com.

Experts suggest the following strategies to preempt unwanted calls or other communication from collectors:

1. Respond within 30 days of receiving a collections letter. For many people who receive a letter from a collections agency, the impulse is simply to bury their heads and ignore it. That's a mistake, according to Ulzheimer. "You can eliminate all communication," he says. "All you have to do is send them a letter within 30 days and tell them, 'Do not contact me anymore through any method.' They can still sue you for the debt, so the act of collecting doesn't necessarily stop, but they can't send you emails or call you anymore."

If you actually owe the debt, he suggests offering a settlement so that it doesn't continue to follow you. Third-party agencies who've purchased the debt "don't have the same skin in the game as the original creditor, so you could offer some sort of reasonable settlement and be done with it."

2. Use those privacy settings. Dunn said she's shocked by the number of consumers whose Facebook profiles are set to completely public. "Even though I'm not your friend, I can see all your pictures," she says. Setting your profile to private reduces the likelihood that a collector could be eying your wall or photos.

3. Be selective about what you post. Social networks like Facebook can create a false sense of intimacy because you're communicating with friends. Even with a private profile, your friends' accounts could still get hacked or someone could be peeking over their shoulder, so it's smart to err on the side of under-disclosing.

Dunn says collectors use social media profiles to "look for the address or employment information. A lot of people put what their occupation is, where they work, cell phone numbers." For instance, when someone gets a new cell phone number, they'll sometimes post it on Facebook so friends can reach them. "I have to say if I was somebody who owed money, I probably wouldn't put [my cell number] online and make it public information," adds Dunn.

Most people know not to post their Social Security or credit card numbers, but many list their birth date. "To me, that's comical," says Ulzheimer. "If someone walked up to you off the street and asked your birth date, would you give it on the street? But you're gladly doing it on Facebook."

4. Don't accept friend requests from strangers. For reasons described earlier, don't approve requests from people you don't know. It could be a friend of a friend, but it could also be a collector or a spammer.

5. Skip the "like" button. Liking your bank or credit card company on Facebook may open the door to them collecting information about you that you haven't given them. How many people actually like their bank? To the extent that you like your bank, that's fine, but I'm not sure that you have to memorialize that by clicking that you like it on Facebook.

If despite these steps, a collector contacts you via a social media site, Kimmel suggests printing out the message or saving a screenshot to your computer to create a paper trial. "Once you have that, report the sender as spam on Facebook and file a grievance with the Federal Trade Commission," he suggests. The consumer could be entitled to up to $1,000 plus attorney fees and actual damages "if a debt collector engages in unauthorized debt collection contact, through, for example, social media," says Kimmel, adding that a consumer attorney could help the person seek redress.

***  Always feel free to "LIKE" Credit Restoration Associates on Facebook: http://www.facebook.com/Financed1

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Reducing Debt in 2012

Trimming the fat may be the most popular New Year’s resolution out there, but trimming your debt is not far behind for a lot of people.

“Getting out of debt is more strategic than simply writing a check to your creditors,” said John Ulzheimer , President of Consumer Education with SmartCredit.com and contributor at the National Foundation for Credit Counseling.
 
“You can save hundreds or thousands of dollars by prioritizing your debts,” he added. “You can also get the benefit of a higher credit score by being smart about what you pay first.”
Ulzheimer recommends these ground rules for those who are serious about reducing their debt in 2012:

REMEMBER THE BASICS
Make sure you make your minimum payments to ALL of your creditors… on time… each month.  If you can pay more, you should.  But skipping a payment or paying late is a big no-no.

RETAILER CARDS FIRST
Choose your retailer credit cards (i.e. Macy’s, Gap, Nordstrom, etc.) as the ones you pay off first.  Be aggressive.  On average, the interest rate on these cards is about 10-12-percentage points higher than general use credit cards like Visa, MasterCard, and Discover.
“You should be able to knock them out faster because the balances on these cards are generally lower than general use cards,” said Ulzheimer.
“And by paying off retail cards, you’ll also improve your credit score because you’ve lowered the number of cards with a balance and the infamous “debt utilization” percentage – both of which are very important in your FICO scores.”

SOCK LESS AWAY…FOR NOW
Ulzheimer said you may also want to stop contributing to your 401K and IRA until you’ve paid off your credit card debt.  The amount you are earning in “gain” is probably not as much as you are paying in interest.
“That means you’re losing money each month you have credit card debt.” Said Ulzheimer.

INSTALLMENT DEBT VS. CREDIT CARD DEBT
Don’t put installment debt in front of credit card debt.  Rates on cars, houses, student loans are much lower than those on plastic.  And you are probably getting tax advantages on your mortgage and student loans.

KNOW WHEN TO SETTLE
If your debt is in default or being handled by a collection agency, then you need to offer what’s referred to as a “settlement.”

“I never advise this unless you’re dealing with collection agencies,” said Ulzheimer.
“They normally acquire the debt for pennies on the dollar so your former $1,000 debt isn’t really what you owe the collector, but that’s what they’re going to try to collect,” he explained.  “Start your offer at 10% of what they say you owe and work with them until a satisfactory settlement has been reached.

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We Like NACA

By: Robert W Linkonis Sr.

I tell all my clients all the time that I am the "Debt Collector Terrorist". This is because a large part of my credit improvement program is getting on the phone with collection agencies, banks, finance companies and debt collectors to make them violate the Fair Debt Collection Practices Act. This forces them to "cease debt collection activities" and work out a settlement or cancellation of the debt.

In the Richmond Times Dispatch last week, I heard about the NACA event coming to the Richmond Convention Center for four days. They were coming to Richmond to help homeowners who are in risk of losing their homes work with the banks to find a solution to help them to avoid foreclosure. I was intrigued with the concept. Especially because of how big the movement was and the size of the venue they were leasing. .

I immediately thought that this company could offer help to some of my clients at Credit Restoration Associates, so I started researching the company.

The first thing that got my attention was their CEO, Bruce Marks. He started the concept for NACA when he was a Union Activist. This evolved into his work as the Executive Director of the Union Neighborhood Assistance Corporation (UNAC) and was one of the first to expose predatory lending and it's devastating impact and the main reason we are in the housing mess to begin with.

What Bruce started doing was make the lives of bank executives a "living hell" unless they started helping the very consumers that they took advantage of. Yes - a percentage of those people should not have been given the loans, but due to predatory lending practices, they WERE given the loans. The banks made out like fat cats when the homeowner is stuck with no other option except foreclosure.

I read where Bruce Marks had been called an "urban terrorist" who went to a speech of the president of Fleet Bank, CEO Terrence Murray, at Harvard University, disrupted the speech and made this man's life miserable for four long years. Eventually, the bank caved and started modifying the loans and help the people stay in their homes. 

 

Bruce's tactics sound like an extreme version of what I do to the debt collectors and collection agencies (the evil side of telemarketing). It actually inspired me to a large degree. Watch out debt collectors... so I had to go and see this event for myself. Here is a cell phone video clip of the event.

I wanted to meet Bruce Marks, but he was hosting the same event happening simultaneously in Charlotte, NC.  Kindred souls will just have to meet another day. 

The reason I wrote this post and am endorsing NACA is mainly because of the research done on the company and on Bruce Marks. Do some research yourself at: www. NACA.com. 

Please feel free to call Credit Restoration Associates at (800) 648-5157 for all questions relating to NACA and home foreclosure. We will always guide you in the right direction. We are the only legal and bonded credit repair company in Richmond, so you know that we are the only legitimate company you will talk with. Our office is on southside in the Boulders Office Complex next to Chippenham Hospital. Call us today and schedule a FREE credit consultation!

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A Credit Score That Tracks You More Closely

By: Tara Siegel Bernard
Anyone who has recently applied for a mortgage knows that lenders are already looking much more closely at your financial affairs. But soon, they’ll be able to easily delve into the deepest recesses of your financial life, accessing information that never before appeared on your credit report.


This week, a company called CoreLogic introduced a new type of credit file, which is based on the giant repository of consumer data it maintains on just about everything that most of the traditional credit bureaus do not: missed rental payments that have gone into collection, any evictions or child support judgments, as well as any applications for payday loans, along with your repayment history.
The new report also includes any property tax liens and whether you’ve fallen behind on your homeowner’s association dues. It may reflect that you now owe more than your house is worth or if you own any other real estate properties outright. It also is supposed to catch mortgages made by smaller lenders that the big credit bureaus may have missed.
 
The idea, CoreLogic says, is to provide lenders with more details about prospective borrowers, supplementing what they already know through the more traditional credit reports furnished by the big three credit bureaus, Equifax, Experian and TransUnion. Moreover, CoreLogic has formed a partnership with FICO — the provider of one of the most popular credit scores used by lenders — which will formulate a new consumer score based on the new data.

Perhaps it’s not surprising that a company decided to pull together this information, since much of it is already publicly available. But because it comes on top of all the other information that’s being collected about you — your exact location at every minute, where you’ve been on the Web — you can’t help but feel that some of these companies know more about your activities than your spouse.
While the CoreScore credit report became available to all types of lenders on Wednesday, the actual score, which will be ready in March, is being created specifically for mortgage and home equity lenders, though it could eventually be developed for other types of credit.

For many consumers, the files are likely to reveal black marks that previously went undetected, which may damage an otherwise clean record. But the companies contend that it works both ways: The added information could help consumers with thin credit files by illustrating positive behaviors elsewhere, say making timely rent payments.

So why now? Clearly, the two companies saw a business opportunity. Lenders, who just a few years back looked the other way, remain particularly skittish about mortgage lending and are looking for more information about prospective borrowers’ ability to pay their debts.

“Lending is very constrained and origination volumes need to grow to make for a profitable mortgage business,” said Joanne Gaskin, director of product management global scoring at FICO. “So lenders are looking for ways to expand, but to expand safely.”

An estimated 100 million American consumers will have a CoreScore credit report, while more than 200 million people have traditional reports from the big three bureaus. Though the new information can influence a lender’s decision, the new score isn’t replacing the classic scores used in the automated mortgage underwriting systems kept by Fannie Mae, Freddie Mac or the Federal Housing Administration, which buy or back the vast majority of mortgages (though CoreLogic said it has let the agencies know what it is doing). But the added information may sway a lender to charge you more (or less) in interest on a mortgage. Lenders of all stripes, including auto lenders, have access to the reports, and they will be marketed to employers and insurers, too.

Ms. Gaskin said that FICO was still tweaking the credit score’s formula. But the next step is to build something that will try to get even deeper inside your financial mind: The company plans to create a more sophisticated tool that will predict how you might behave under different loan terms.

Read the rest of the article HERE


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