Considered a traumatic event especially if you are the family
breadwinner.
A sudden loss of income will dramatically change your
current lifestyle.
Losing your job will not directly affect your credit
score, in fact your employment and income are not factors directly
impacting your credit score. Creditors and the Credit Bureaus may not
know you've lost your job unless you advise them.
Your credit score
could be indirectly impacted if you fall behind in paying your
financial obligations, i.e. house payment, car payment, minimum payments on credit cards,
student loans, etc.
Many employers are now requesting a credit check as
part of the hiring process.
Many people and businesses carry some type of debt, i.e.a home
mortgage, line of credit, credit card debt, or student loans.
Some debt
can be a good thing as it may be used for the purchase of a home, or
investing in additional education. Loans taken out for business help
them to grow and expand.
Too much debt can lead to bankruptcy, putting
at risk your home or business.
Debt becomes a vicious cycle: the
minimum payment you are required to make could equal the amount of
interest the credit card company is charging.
Most of us use plastic because it's fast and easy, getting into credit card debt is also fast and easy.
Credit card companies make money when you don't pay your bill every month,
plus the late payment fees, and perhaps their option to possibly
increase your interest rate. Debt continues to grow. Credit Cards are
convenient, who needs cash?
We have become detached from paper money, with technological advancements you can sign
up for direct deposit of checks, internet banking and internet deposits
of checks via a photo of a check, etc.
Not only emotionally draining but commonly, divorce is a financial
drain.
Dividing assets and debt can create financial burdens and
resolving them is a lengthy process.
Credit card accounts that are held
in one spouse's name are the responsibility of that person after a
divorce.
Credit problems may arise when the account holder has a low
income or is not employed outside of the home.
Financial
responsibilities will be challenging to meet on a limited income, late
or missed payments have a negative effect on the account holders credit
record.
A
foreclosure remains on your credit report for 7 years. It's impact to
your Credit Score will lessen over time.
While a foreclosure is
considered a very negative event on your Credit Score. It will not ruin
your score over an extended time.
While you keep all of your other
payment obligations in good standing, your Credit Score can rebound in
as little as 2 years.
The important thing to keep in mind is that a
foreclosure is a single negative item. Keep this item isolated to a
single account, like your mortgage account.
If you had a foreclosure, in addition
to defaulting other credit obligations, it will be more
damaging to your Credit Score.
Filing
for bankruptcy will be factored into your credit score until it falls
off your report. It may take up to 10 years to fall off your credit
report. The impact will lessen over time.
After bankruptcy has been
filed it's your job to begin re-establishing credit in good standing. A
good practice is to obtain a credit card and make all your payments on
time.
Use 30% of your available credit at any given time; in credit report language it's called Credit Utilization Ratio. This refers to how much credit you have available to use versus how much credit you are using.
Car Loans are one of the ways to help get back on the road to good credit.
A mortgage or car loan is a secured debt which means the lender has the
right to foreclose on your home, or re-possess your car, and this is why lenders are willing to give you a second chance.