Mom ruined your credit? 7 steps to recover it
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
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Dear Opening Credits,
First, bless you for helping people. My name is
Robert, and my mom ruined my credit when I was 18. I can't even get a
credit card. I am a brand new engineer making money these days, and I
need to fix my credit. How do I check my credit, and how do I fix it? I
the money to start my new life, but not the credit. How do I make things
right? Thank you very
much for your time. --
Don't be so committed to the notion
that you can't get a credit card
. Even with damaged credit, it's usually
possible to qualify for some type of account. However, before I get to which
type I think you should pursue, I'd like you do a few things:
yourself. You made it through college and
have secured a well-paying job in your field. In this economy, that's an
2. Open a savings
account. Sounds like you're a young adult
and, as such, you might have few obligations and expenses. Live low and begin to
sock money away aggressively. Aim for accumulating at least three months worth
of essential living expenses, and once you have that, keep saving. You'll soon
see why I urge you to do this.
3. Check your
credit reports on AnnualCreditReport.com. You are entitled to a free credit report from each credit bureau once per year, but more if fraud is suspected or has occurred.
areas of concern. I presume that
your mother obtained a credit card in your name without your knowledge or
consent, and then she charged and didn't pay. Now you have late payments,
charged-off accounts and collection accounts on the report for which you
were not responsible? Mark all erroneous line items.
everything that's not right. The Fair Credit Reporting Act gives you the right to dispute errors and have them removed from
your credit file. So jump on the credit bureaus' websites and start disputing.
If you have any supporting documents, make copies and send them. The bureaus
have 30 days to investigate, and if the results are in your favor, they will
expunge the marks. You can expedite the process by also contacting the
reporting creditor or collector, telling them that you are a victim of identity theft, and request that they stop reporting the information.
6. Put a
statement on your credit file. If, for some
reason, you don't get the outcome you deserve the first time, keep disputing --
but also add a statement to your credit reports. In 100 words or fewer, explain why you
are not responsible for the derogatory information. Though it won't help your
score, it can make a difference to future employers and landlords who may be
adding a fraud alert or credit freeze. If you think
mom might still be a threat, you can add a fraud alert to your credit file.
With it in place, potential lenders will have to be extra careful about
verifying your identity. A credit freeze is more extreme -- lenders won't be
able to see your reports at all unless they contact you first.
obtaining a new credit card that really does belong to you: I strongly suggest
that you go for a secured card account now, using the money you've saved as a
deposit. This is a really sweet option as they're fairly easy to qualify for.
Also, since you haven't established yourself in the world of credit yet, an
unsecured card might be tough to get -- and even if you did, the terms would
probably be unattractive.
Once you have a
card, charge regularly and pay the balance off each month. You'll be
replacing incorrect, negative information with that which is correct and
positive, causing your report and scores to improve.
Thanks for reaching out to me,
Robert. These are painful letters to receive, and they are staggeringly common.
In fact, I get so many I wonder if I need to write a book specifically for
people who've been financially harmed by their loved ones. Clearly it's scourge
that needs more attention.
See related: All about credit freezes, Add a 100-word statement to your credit reports, 10 things you must know about identity theft, How to get the real free credit reports
Erica Sandberg is a nationally renowned personal finance authority. She’s host of several financial web shows, and a frequent guest for media outlets such as Fox, Forbes, Nightly Business Report and NPR. Erica previously was affiliated with Consumer Credit Counseling Service and was KRON-TV’s on-air credit expert. Her book, "Expecting Money: The Essential Financial Plan for New and Growing Families," was published in 2008 by Kaplan Press.
Send your question to Erica.
Published: March 16, 2011
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