Ask Stacy: Can You Help Me Clean Up My Credit History?

This reader has bad marks on her credit history, is worried they'll prevent her from getting a job, and wants to get them removed. There are millions of Americans in her shoes.

Ask Stacy: Can You Help Me Clean Up My Credit History? Photo (cc) by emilydickinsonridesabmx

Here’s a question concerning what to do about bad marks in a credit history. I don’t normally print letters this long, but I’m making an exception because it illustrates typical problems and will allow me to offer specific solutions.

See if you can relate to any of these things:

Hi Stacy,

When I was young, I thought I was invincible and didn’t care too much to keep my credit up. I am now a 25-year-old single parent of two young children. I’ll graduate in the next year with my BBA. At that time I will, of course, need to start my career. Well, my credit will end up stopping me from being able to succeed because I cannot obtain a job as a health care administrator with the credit I currently have. So, I need help to get on the right path to fixing it.

Here’s a breakdown of the negative marks on my credit:

  • Collection agency for T-mobile: I disputed this two years ago, and they still have it reported as disputed without removing it.
  • Hospital bill: I have asked that the collection agency remove this because it’s hurting me and I’ve paid it, but they say it’s not in their policy to remove the debt.
  • $36 collection for a hospital bill: I would like to write them a letter to negotiate this bill and have it completely removed from my credit before I pay it off, but I am not sure how to do this effectively.
  • Verizon Wireless: Unpaid bill for $668 (I was young and ignorant and could not pay the bill)
  • Car loan: Late on two payments by 15 days. Ultimately I paid the car off, and I’ve written a letter of goodwill removal for these late payments. Have not heard back.
  • CitiBank student loans: There was a period of six months that I did not have the paperwork filled out and returned for a deferment while I was still in school, and so this is constantly hitting my credit even though I have them deferred now. Can I do anything to get this removed?
  • $100 from a hospital bill for my daughter that I did not take her to. I am not sure who took her to this hospital, but I never did, so I know I did not sign the papers for this. I did not even know about this 2-year-old debt until I pulled my credit report last week.
  • $126 from a payday loan: I would like to just settle this debt for them to remove it completely from my credit. I am not sure how to go about doing this with a negotiation letter.

I am coming to you because I trust your advice because of your reputation. Thank you so much for your time! I truly appreciate it more than you know.
– Lacey

Here’s my advice, Lacey:

First, don’t freak out about your job prospects

You say: “My credit will end up stopping me from being able to succeed because I cannot obtain a job as a health care administrator with the credit I currently have.”

That’s probably not true.

While some employers will check your credit, most won’t and others aren’t allowed to by law.

According to a 2012 survey by the Society for Human Resource Management, fewer than half of employers check credit before hiring. In addition, many states limit the ability of employers to check credit. To check the law where you live, see this chart from the National Conference of State Legislatures.

Even if a potential employer does check your credit, you’ll know in advance because you’ll have to give them written permission. That will give you the opportunity to explain negatives, and those that Lacey lists are probably not the kind that would stand in the way of most jobs.

Earlier this year, USA Today interviewed Elizabeth Bille, vice president and associate general counsel for the Society for Human Resource Management. Here’s what she said about what employers are looking for when checking credit:

Typically what they’re looking for are patterns of money mismanagement and debt that the employee has not attempted to resolve. Things like education debt and medical debt aren’t part of such patterns.

Of course, even if your credit won’t impact your ability to get a job, you’ll still want to clean it up. So let’s explore the techniques to do it.

Got more money questions? Browse lots more Ask Stacy answers here.

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