New to credit, behind on bills, worried about job hunt

He's racked up $1,500 on two cards and can't pay. What to do?

Opening Credits columnist Eric Sandberg
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

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Question for the expert Dear Opening Credits,
I have new credit. I owe $1,500 on my two credit cards, and it's going to be two months since I didn't pay the minimum on those. Before that, for four months, all the balances were fully paid. I relocated to a different state and have not been able to find a job yet. Please tell me how long before the nonpayment is going to reflect on my credit rating and go into collections. Is there any way I can save myself and stop them for two more months before they ruin my credit? I have a few interviews lined up in coming days. -- Pratap

Answer for the expert Dear Pratap,
I hope I caught you before you missed another payment cycle! You're heading into dangerous credit damage territory as the recentness, frequency and severity of problems weigh heavily on credit reports and scores. Any debts that are large enough to sit at the top of your credit line for a long time and have been delinquent in the very near past will submerge your rating like it was tied to a brick.

Can you rectify the damage? It's possible, but you must take immediate action. You seem to have a short history of paying the accounts just fine, and that's still showing up on your reports. However, you broke pattern as soon as you stopped sending at least the minimum requested payments. When that happened, your issuers dinged your credit by reporting a 30-day late, and then a 60-day late notice when you missed another. Your credit card issuers will continue to do so until they either charge the debt off and sell it to a collection agency, or sue you for the balance due. 

What you need to do now is call both of your credit card companies and see what you can work out with them. If you've found a job, you can probably offset the collectors and lawsuits. The late payments will continue to be on your credit reports for seven years, but the older they get, the less important they become -- especially if you start charging and paying on time again.

If you still aren't working and are unable to pay, plead with your issuers to give you some sort of hardship plan where they suspend payments for a few months while you continue your job search in earnest. They can only say no, so give it a try.

In the meantime, try not to fret too much about what a prospective employer might think of your credit reports. Some pull them but not all do, so it might be a non-issue. Much depends on the industry and position -- if you'll be handling money or in a management position, they are more likely to check. If they ask for your permission to pull your report, you may have reason to rejoice. That typically means that they're interested in you as a candidate.

Consider their request as your opportunity to shine. Set up a meeting with the human resources department. Explain that while you've been out of work, bills piled up. They will see some late payment notices on your credit report, but you take your obligations very seriously. The moment you begin to earn a salary, you will get your debt under control. If you've negotiated a plan with your creditors, say so. That shows initiative and a take-charge attitude that most employers find impressive.

So, Pretap, get in there and project an attitude of "Yes, I had some financial difficulties, but I can and will handle them responsibly." And then do it.

See related: FICO's 5 factors: The components of a FICO credit score, 6 myths about credit report checks by employers

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Updated: 03-21-2019