CREDIT

How do I get a good credit rating?

• There are a number of ways, including: maintaining a savings account, buying low-priced items on credit, getting a job, and using credit cards. A credit rating is intended to measure your ability to repay a debt. This can be established by a past record of completing payments or by indications of a stable income or other sources of money.

How long does it take to clear up a bad credit report? 

• It depends on the seriousness of the past problems and the amount and purpose of the new loan. Credit reporting agencies often seem to want references on loans and employment for the past five years. If one has sufficient collateral for a loan, then a past bad credit rating might not matter.

What is collateral?

• Collateral is anything that has value that can be given as security for a loan. The lender wants to identify property which has a value at least equal to the amount of the loan so that the property can be used to pay back the debt if you are unable to repay the loan.

What if I buy an item such as a T.V. or stereo on installments, and it has problems that need to be fixed? 

• If the store has a duty to fix the item, such as under a warranty, and if the store refuses to fix the problem, then you can generally stop payments. But the store may decide to take you to court, and the court will decide whether you must pay.

If I buy something on installments and later have money to pay off the entire amount owed, must I pay the entire amount that would have been due over the term of the original contract? 

• No. You will be entitled to a refund of finance charges that would have been due.

Can a purchase contract say that if I do not pay, the store can automatically get its money from my wages?

• No. Wage garnishment can occur only after a lawsuit and a judgment.

Can a lender have different rules for making loans to women than to men? 

• No. It is unlawful for any creditor to discriminate against any application on the basis of sex or marital status. Lenders may only make distinctions based on the applicant’s credit-worthiness. A married person who does not have an outside job might have problems obtaining a loan unless that person has sufficient collateral to provide as security for the loan. If the person’s spouse has an established credit rating, the spouse could guarantee the loan or provide other security that would support the loan.

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