A friend of mine recently got a letter from a collections department (her first) asking her to pay a certain amount. She has a history of late payments. I just wanted to know how the whole situation works. What are the types of ratings, will it affect her future, related to finding employment or getting a loan? How long does it take for this bad history to clear from her file?
Bad Credit.
- Thread starter El_Mariachi
- Start date
They will call her to know end. They will threaten her like it's no tomorrow. I would ignore the threats and pay back the loan as quickly as possible. Do not give the collection agency any information whatsoever. Do not make any commitments to them. Pay the lender directly, not the agency. Don't listen to the agency lies telling her she must pay the agency. Be prepared for harrasment.El_Mariachi said:
Ratings go from R1 to R9. Since she's with a collection agency now, she's in the R9 category with this lender.
Employment - no. Loans - yes.
7 years after her loan is paid off.
Yes, the history will clear in 7 years provided she does not attemt to apply for new credit during that time.
One way to accelerate the recovery of her rating is to invest in a prepaid or secured credit card. These work exactly like a regular credit card. You open an account and "pre-load" the card with cash up-front. You can obtain a prepaid credit card with no credit or income check. You just load the card with cash and this becomes your "credit limit". You are in fact using your own money so there are no interest charges. You do pay a small set-up fee (depending on the institution it's 5 to 50 dollars for initializing the account and 5 dollars each time you load the card),
Prepaid credit cards can't get you into further financial trouble or lead to more credit problems. Responsible use will help restore your credit rating much faster. And you can engage in credit card transactions such as purchases over the net or car rentals or hotel reservations.
One way to accelerate the recovery of her rating is to invest in a prepaid or secured credit card. These work exactly like a regular credit card. You open an account and "pre-load" the card with cash up-front. You can obtain a prepaid credit card with no credit or income check. You just load the card with cash and this becomes your "credit limit". You are in fact using your own money so there are no interest charges. You do pay a small set-up fee (depending on the institution it's 5 to 50 dollars for initializing the account and 5 dollars each time you load the card),
Prepaid credit cards can't get you into further financial trouble or lead to more credit problems. Responsible use will help restore your credit rating much faster. And you can engage in credit card transactions such as purchases over the net or car rentals or hotel reservations.
Any idea which financial institutions offer the best pre paid credit cards ? ThanksWhaWhaWha said:
Gladdy
Some banks will issue you (non-secured) credit cards these days even if you have bad credit. And yes, I am referring to some of the major banks, not back street lenders.WhaWhaWha said:
The key is to be responsible in how you manage your bank account(s). Definitely no bounced chqs at all for a long period of time.
Thanks for your replies. I thought the R9 rating meant bankruptcy? If bad credit does not affect her chances of being employed, why is it some employers do a background credit and criminal check. I can understand the criminal part, but what does your credit have anything to do with being hired?
7 years is a long time. Is there any way to quicken the process? Maybe call the credit company and ask them to clear your file?
7 years is a long time. Is there any way to quicken the process? Maybe call the credit company and ask them to clear your file?
gladheateher said:
This is your best bet i think for a secured cost they dont charge dollar for dollar just $75 and they offer anywhere from $450-750.
Its a geat way to start for 18 months then get yourself a major bank credit card
http://www.capitalone.ca/cards/secured.shtml
I'll let her know of the secured credit cards.
I'm wondering if someone can answer this for me:
If bad credit does not affect her chances of being employed, why is it some employers do a background credit check before they hire you? Can they reject you just because you have bad credit? What does bad credit have anything to do with you being hired?
I'm wondering if someone can answer this for me:
If bad credit does not affect her chances of being employed, why is it some employers do a background credit check before they hire you? Can they reject you just because you have bad credit? What does bad credit have anything to do with you being hired?
depends on job. Some banks and jobs where you are in charge of large amounts of money want to make sure your not in fin'c hardship. only makes sense. Also, heres a link to where you can find pretty much any cc on the net.
for secrued cards try,
capital one
hometrust visa and there is another m/c. check the link.
http://www.creditwizard.ca/
for secrued cards try,
capital one
hometrust visa and there is another m/c. check the link.
http://www.creditwizard.ca/
btw,
when i was 16 and 17 i lied about my age to get credit cards, then i screwed up. I owed about 7,000$ onabout 10 different accounts. Had 7 R9s. I was not even allowed to have credit in canada. So i hired a lawyer to clear my record.
Results = $7,000 paid back to lenders (which should be the case)
and almost $40,000 in legal fees LOL.... had no choice, when your in business you need good credit. LOL
when i was 16 and 17 i lied about my age to get credit cards, then i screwed up. I owed about 7,000$ onabout 10 different accounts. Had 7 R9s. I was not even allowed to have credit in canada. So i hired a lawyer to clear my record.
Results = $7,000 paid back to lenders (which should be the case)
and almost $40,000 in legal fees LOL.... had no choice, when your in business you need good credit. LOL
There are a couple ways. You can go to credit counselling. If you are accepted into this program and pay up, you'll be in an R7 rating. After you pay up, you'll be at R4.El_Mariachi said:
You can call the lender directly and negotiate. There's no guarantee here, but if you come to an agreement, you must honour your committment.
The world of credit is fascinating, isn't it? LOL 
You can get away with not returning money you borrowed from anyone ... except banks and schools.
I had a friend who owed York U tuition and he would get harrassement calls from an agency day and night ..... he didn't pay and York dropped him and wouldn't let him back into school until he had paid up ...
Also, your credit is all registered with the credit bureau so you can't get away. You can declare bankruptcy and be reborn again in 7 years like mentioned by everyone, but, it still looks bad if you have bankruptcy in your records. Nonetheless, banks can't stop you from opening a bank account because you have bad credit/have been bankrupt/etc. it's against the law.
Furthermore, according to the Income Tax Act, if interest is less then $100, you don't have to give your SIN card number ... this might be useful if you wanna full off some "tricks" ... LOL
You can get away with not returning money you borrowed from anyone ... except banks and schools.
I had a friend who owed York U tuition and he would get harrassement calls from an agency day and night ..... he didn't pay and York dropped him and wouldn't let him back into school until he had paid up ...
Also, your credit is all registered with the credit bureau so you can't get away. You can declare bankruptcy and be reborn again in 7 years like mentioned by everyone, but, it still looks bad if you have bankruptcy in your records. Nonetheless, banks can't stop you from opening a bank account because you have bad credit/have been bankrupt/etc. it's against the law.
Furthermore, according to the Income Tax Act, if interest is less then $100, you don't have to give your SIN card number ... this might be useful if you wanna full off some "tricks" ... LOL
There are essentially two things that potential lenders can learn about you from a credit bureau: Your credit report, and your credit score.
The credit report includes all the facts the bureau knows about you. It includes the total owing on all your cards, the total amount of loans you have, lines of credit, and so forth. Significantly, it probably does NOT include your mortgage, unless you have defaulted on one. That's because banks tend not to report their mortgage business to the credit bureaus, and so the bureau's don't have it.
The score part of your report is interpretive, and actually "score" is misleading. There are LOTS of different scores. The scores are produced by adding up all the different facts in different ways, calculating various ratios, and all sorts of other fancy things. Big lenders, like banks, often make up their own scores rather than choosing from the scores provided by the bureaus.
In terms of cleaning up your credit, as everyone says, it takes seven years for a negative mark on your report to grow old and expire. The right thing to do is try and consolidate all debts into a single debt. This is essentially what a credit counselling agency will do for you. You can do it yourself if your credit is not totally crap: Go to your bank and take out a line of credit or a loan and use that new debt to eliminate all the other debts. Make sure the new loan has a reasonable payment plan, and make the payments.
Doing the above has two effects: First, you get a lower interest rate. The bank loan/line will have substantially less interest than a credit card or store creditor or unpaid tax debt would have. Most creditors will charge you 1 or 2% per month on unpaid balances, which works out to 12-20% per year. The line of credit will charge you 5-10% depending on your situation. Second, despite the fact that you are still in debt, you now have no bad debts. You still owe just as much, but you have paid off all the debts save the new loan, and you have made every payment so far on that new loan. Your credit will immediately improve; though you will still be a fairly long way off from getting it all cleaned up and having "good" credit.
Your credit improves for two reasons: First, you will have fewer debts, fewer credit cards, etc., and that is commonly a part of your score. Second, everything you do have is in good standing. Of course, you have a bunch of late payment notes, and those take time to expire, but they are not as bad as having an outstanding default!
It's possible to clear bad marks completely off your credit report faster than seven years, but it's tough. Essentially, you have to convince the credit bureau that the bad mark on your credit score was actually an error: Not only have you paid back the loan satisfactorily, but the previous "default" was actually not your fault. This is usually tough, especially if it really was your fault.
Sometimes you can succeed, especially if you can convince the creditor to side with you and write a letter to the bureau stating that it was all just a misunderstanding. Even then, expect it to take six months for the bureau to "investigate" (ie: drag their feet) before it actually comes off your record. If you can remove a few items from your report--especially newer ones--it'll help. The advantage in removing newer ones is obviously to hasten the 7 year waiting period before the last bad debt disappears over the horizon.
Beware of fly-by-night scam operators who try and rip off people with bad credit. Some con men operate on promises that they can clear your credit up magically when in fact they can do no such thing. Worse, some will try and extract money from you claiming that they will use it to consolidate and pay off your debts for you--when in fact they just disappear with all your cash, and you are now further into default and deeper in debt.
The credit report includes all the facts the bureau knows about you. It includes the total owing on all your cards, the total amount of loans you have, lines of credit, and so forth. Significantly, it probably does NOT include your mortgage, unless you have defaulted on one. That's because banks tend not to report their mortgage business to the credit bureaus, and so the bureau's don't have it.
The score part of your report is interpretive, and actually "score" is misleading. There are LOTS of different scores. The scores are produced by adding up all the different facts in different ways, calculating various ratios, and all sorts of other fancy things. Big lenders, like banks, often make up their own scores rather than choosing from the scores provided by the bureaus.
In terms of cleaning up your credit, as everyone says, it takes seven years for a negative mark on your report to grow old and expire. The right thing to do is try and consolidate all debts into a single debt. This is essentially what a credit counselling agency will do for you. You can do it yourself if your credit is not totally crap: Go to your bank and take out a line of credit or a loan and use that new debt to eliminate all the other debts. Make sure the new loan has a reasonable payment plan, and make the payments.
Doing the above has two effects: First, you get a lower interest rate. The bank loan/line will have substantially less interest than a credit card or store creditor or unpaid tax debt would have. Most creditors will charge you 1 or 2% per month on unpaid balances, which works out to 12-20% per year. The line of credit will charge you 5-10% depending on your situation. Second, despite the fact that you are still in debt, you now have no bad debts. You still owe just as much, but you have paid off all the debts save the new loan, and you have made every payment so far on that new loan. Your credit will immediately improve; though you will still be a fairly long way off from getting it all cleaned up and having "good" credit.
Your credit improves for two reasons: First, you will have fewer debts, fewer credit cards, etc., and that is commonly a part of your score. Second, everything you do have is in good standing. Of course, you have a bunch of late payment notes, and those take time to expire, but they are not as bad as having an outstanding default!
It's possible to clear bad marks completely off your credit report faster than seven years, but it's tough. Essentially, you have to convince the credit bureau that the bad mark on your credit score was actually an error: Not only have you paid back the loan satisfactorily, but the previous "default" was actually not your fault. This is usually tough, especially if it really was your fault.
Sometimes you can succeed, especially if you can convince the creditor to side with you and write a letter to the bureau stating that it was all just a misunderstanding. Even then, expect it to take six months for the bureau to "investigate" (ie: drag their feet) before it actually comes off your record. If you can remove a few items from your report--especially newer ones--it'll help. The advantage in removing newer ones is obviously to hasten the 7 year waiting period before the last bad debt disappears over the horizon.
Beware of fly-by-night scam operators who try and rip off people with bad credit. Some con men operate on promises that they can clear your credit up magically when in fact they can do no such thing. Worse, some will try and extract money from you claiming that they will use it to consolidate and pay off your debts for you--when in fact they just disappear with all your cash, and you are now further into default and deeper in debt.
