I'd like to keep the scar as small as possible...

March 16, 2008 9:01 PM

Credit rating/report question...

Okay, I used to have GREAT credit. It was about 750+ when I moved into my current apartment in 2005. I had worked really hard to clean it up (finally got my student loan off there!) and I was making super good money, all was well. But then over the last year some bad stuff hit and I was stiffed by a client, etc. (When I saw it coming, I stupidly signed up for one of those "credit saver" programs through my credit card just in case, only to discover when I went to make a claim with them that it was a scam and they couldn't help me at all because of fine print I didn't read that said I had to make absolutely $0 for 30 days to be elligible. Which, I never did. Bastards.) Anyhooooo, I had to just accept that I had no choice but to let stuff go while I did damage control and that I was just going to have to accept responsibility for it. I haven't looked yet but I'm thinking I may now have about 2-6 months or so of some freshly reported poor payment history on my record now.

I'm about to get a bunch of paychecks soon and pay off everything, but is there anything I can do to minimize the permanent damage? I may need to get some credit reports to move into a new apartment and I'm afraid I've totally screwed myself up. I want my credit clean again, but I know it probably is just going to take time to live this down. And if I'm looking at apartments, is there any way I can make it clear that the incidents were just special circumstances and not something that's going to continue? How should I approach this to make it just a little blip in the radar instead of something that haunts me?

Thoughts? (And yes, I know I need to look to find out what the damage really is... I'm going to do that right after things are paid off.)

posted by miss lynnster to work & money (10 comments total)

Did you make at least the minimum payment on your credit cards? I can't tell from your question whether you failed to pay at all, or you are just carrying large balances. Do you mind giving some specifics? (Missed/late payments and how late, balances, credit limits, etc)
posted by reeddavid at 9:35 PM on March 16, 2008

Whatever damage has been done, has already been done. The only thing you can do moving forward is keep it under control. Paying at least the minimum balance is critical, if you miss payments that is a bad mark that you can only alleviate by paying on time in the future.
posted by sophist at 9:43 PM on March 16, 2008

It's all a case by case basis. Some companies don't report first-time delinquincies until it's been over two months past due. Others will report it right away. Also, keep in mind that if you paid within 30 days of the payment date, they can't report it as being over 30 days past due.

So there is some hope. Hang in there. You should use the FICO score simulator w/ the "best course of action" simulator to see what would improve your score the most. Good luck.
posted by dannon205 at 10:23 PM on March 16, 2008

There were a few times where I had to miss payments entirely. I was stiffed a huge amount so my credit cards got paid after the big rent check.
posted by miss lynnster at 11:21 PM on March 16, 2008

You really need to get your reports and scores and find out the damage before I think people can give you useful, specific advice. It could be that some cards didn't report you late at all, it could be that they all did, and how many days late (30, 60, 90, etc.) is also important.

If there are some lates, you can write a "good will letter" to credit card companies that have reported you late explaining your circumstances and asking them to remove that late payment from your report. Some might, it doesn't hurt to ask. Look in credit forums (www.myfico.com, www.creditboards.com) for samples.

Next time (if there is a next time) you have problems paying your bills, call your credit card companies ASAP in advance and try to work something out. Not paying them and not calling them is not a good strategy.
posted by Jacqueline at 1:49 AM on March 17, 2008

I know it probably is just going to take time to live this down

That is correct.

Nothing's out to collection, and you haven't been taken to court, right? So it could be worse. It'll all age off after a year or two. Don't miss any further payments if possible, pay some stuff down to zero if possible.

My hunch is that you're not going to be hassled about renting a future apartment over this. If you're worried that it looks like you're in a crisis right now, make a month or two of on-time (even minimum) payments. Landlords are probably looking for court judgments and such against you, things that might prevent you from prioritizing your income towards making rent payments (over credit card payments).

I'm going to do that right after things are paid off

I'd do it now. Doesn't help anything to wait.

Couple of other comments--

--I've seen cases where comments placed by the consumer in a credit report ("Oh, I'm sorry, I had some hard times") stayed in the report longer than the actual report of late payments. Oops. Unless you're in really deep doo, which it sounds like you're not, it's often best just to be good, make on-time payments and keep your head down. Save the letter-writing for a serious crisis, like a multiple organ transplant.

--(Following up on dannon205) Way back in the day, it was well-known that most credit issuers wouldn't report the first month past due, with one common exception (let's call them, uh, Rears Soebuck). There may be a little bit more "grace period" in reporting than you're imagining. Go ahead and get your report so you know what you're dealing with.
posted by gimonca at 5:49 AM on March 17, 2008

You are entitled to check your credit rating once a year for free, and you should do so (the "official" site is https://www.annualcreditreport.com/cra/index.jsp). Perhaps the damage isn't as bad as you feared (one can hope). I'm sure many people have said it, but always try to make those minimums on the CCs no matter what. In addition to this, it's always good to be on top of the credit report since the reporting agencies are very sloppy even when you're in good financial shape. Every time I have checked mine (every several years for the last 20) I have had to have them take off stuff that wasn't supposed to be there. (I have the disadvantage of having a very common name, a father with the same name in the same state, and an ex-wife whom reporting agencies' computers are always trying to link back up to me in reports because of shared past addresses and bank accounts - for all their power over us, the credit agencies' systems are not very smart.)

Also, if you were sacrificing the CC payments to be responsible with your rent payment, get a letter of reference from the landlord you made all that effort to keep happy. Maybe that would help offset any damage made by late payment info on your credit report?
posted by aught at 6:40 AM on March 17, 2008

Yeah, ditto the "look at what's actually on the report(s)"-- you'll get a better sense of what to do (and we can give you better advice) if you know.

If the reason you're waiting to check until you've paid everything off is because you don't want to burn your once-a-year free report, keep in mind that you can actually get three free credit reports a year-- one from each of the three major credit bureaus-- so you could get one now and the other two after things are paid off. (Of course, the reason they do that is because what appears on each report sometimes varies. But they'll usually be pretty close.)

Also-- am I understanding correctly that you're waiting until after you pay off your credit card balance to check? Because it seems to me that what you need to figure out is whether they reported your missed/late payments-- you paying off your balance shouldn't affect that at all (it will affect the section of the report about how much debt you're carrying, but you already know that! And it will affect your credit score, but you have to pay to get access to your credit score anyway, so if you're planning to get your credit score then you might as well get a free report now and a paid report + score later.) So there may not be any reason to wait anyway.

Finally, I'd recommend checking out creditboards.com or one of the other messageboards dedicated specifically to this kind of stuff-- there are a lot of people who post there who've been where you are and would be glad to advise about the details. (Plus there are sometimes deals/sales on additional credit reports or your credit score, and they'll be on top of those.)
posted by EmilyClimbs at 7:53 AM on March 17, 2008

My hunch is that you're not going to be hassled about renting a future apartment over this. If you're worried that it looks like you're in a crisis right now, make a month or two of on-time (even minimum) payments. Landlords are probably looking for court judgments and such against you, things that might prevent you from prioritizing your income towards making rent payments (over credit card payments).

Gimonca is correct, in most cases. In my experience anyway, landlords are on the lookout for egregious default, not a missed payment or two - especially if your income is clearly sufficient to pay the rent (monthly income at least three times the monthly rent). The only time I've known landlords to demand pristine credit were in 1) tight rental markets (like San Francisco's circa the dot-com boom) or 2) properties which were in high demand and often had a waiting list.
posted by Rosie M. Banks at 8:28 AM on March 17, 2008

My guess is that having a few 30 or 60 day delinquencies, and carrying balances, won't send you much lower than the high 600s, at least not after those delinquencies are six months old.

Since you did have a stellar record, you are an ideal candidate for the goodwill letter. I've had that work for me once. It's a one-time removal of one or a couple late marks. You write a letter to your credit card holder saying something like "My whole life I have valued good credit and paid on time. I recognize I screwed up at the beginning of 2008. It was because of XYZ outside of my control. I've fixed that out-of-control situation and taken steps to prevent it again. To keep our relationship strong [implication that you might change credit cards] could you please remove these delinquencies?"

You can also use all the credit repair tactics they talk about on creditboards. These are basically gotcha techniques. They have to prove your record is correct, so you can send letters requesting certain kinds of information, and if they fail to reply within the time limit, they have to take those marks off your record. But this takes all kinds of time, and I'm not sure your situation is bad enough to warrant it. If you needed great credit within six months or a year, I'd say, do it, but otherwise, I'd just wait for your score to rebound on its own. Paying down your balance will definitely make a difference.

The best advice I can give you is to check out the forums at credit boards -- those people have a lot of information.

Maybe for the apartment question, you could have your current landlord write a letter saying you've always paid on time? That way you could present it if you're ever questioned about this string of latenesses and say, "yes, true, but I always pay my landlord first, and even during that period, I never missed a rent payment."

As for the future, it sounds like you have a somewhat volatile income, so (I'm sure you have thought of this) maybe you want to boost whatever you keep in a savings account so you can at least pay rent plus minimum payments for six to nine months?
posted by salvia at 8:46 AM on March 17, 2008