Have you made mistakes regarding your credit in the past? That could haunt you … for a long time.
A whopping 68 percent of Americans make at least one major financial mistake, or “credit fumble,” before turning 30, leading to a negative mark on their credit report, according to a Credit Karma survey.
These mistakes include overspending on credit cards, missing payments, defaulting on a loan or having an account sent into collections, the survey found.
The greater the offense, the longer it will reflect on your credit report, said Bethy Hardeman, chief consumer advocate at Credit Karma. In fact, it usually takes consumers seven to 10 years to erase negative marks from their credit, thanks to the Fair Credit Reporting Act.
“I think what a lot of people don’t realize … is how a missed payment can stay on your credit,” Hardeman said. “It can be one mistake that you don’t think is a big deal that can cost you thousands in the long run.”
Credit is an important factor in determining what kind of loans consumers receive, as well as whether they are approved for an apartment lease, Hardeman added.
The survey, released Thursday, found that 3 out of 4 respondents believed their credit-related mishaps have had a negative impact on their lives.
“These early mistakes can have a lingering impact on the quality of people’s lives, and we feel that with better, targeted education and learning tools for new-to-credit consumers, this cycle can be broken,” Kenneth Lin, Credit Karma’s founder and CEO, said in a statement.
There are many reasons why someone may end up with a negative mark on their credit history, but the biggest one is lack of education, Credit Karma found.
More than 50 percent of respondents said they had received their first credit card by age 21, but 72 percent said they had received no education about personal finances before going to college.
Hardeman said consumers should know “the long-term ramifications before you take out a credit card or take out a loan.”
Consumers also need to understand how their overall credit works, said Sean McQuay, credit cards expert at NerdWallet.
“Your credit shows how good you are at managing other people’s money, not your own,” he said.
One way consumers can regain proper footing on their credit is by applying for a secured credit card, McQuay said. “This gives you a chance to prove yourself … and over time, you can apply for more traditional credit cards.”
Secured credit cards work just like any other credit card. The only difference is the cardholder has to put up a certain amount of money as collateral, and his or her credit line will usually equal the collateral’s amount.
However, McQuay also said the consumer needs to be mindful of the risks involved with secure credit cards.
You need to have the cash on hand,” he said. “Even $100 can be a lot of money for someone to just give over.”
For the study, Credit Karma and research firm Qualtrics surveyed 1,051 American adults ages 31 to 44 from late November 2014 to early 2015.
Buying a home is now easier than it has been in years.
|Here’s the Bottom Line: If you have past credit problems, you can still buy a home. We will work with you to re-establish new credit and get qualified. It may take a little time, but we will put you on the path to home ownership and make sure you reach your destination!
Call us to get on a path to mortgage and credit qualification that will quickly lead to your new home.
We close loans every day that Banks would not, or could not approve.
J. Scott Harris
Vice President – Mortgage Miracle Working – NMLS #375517
Closing FHA / VA & USDA Loans at 580+ in Texas, Oklahoma & Louisiana
885 E. Collins Blvd. Suite 110
Richardson, TX 75081
24/7 Mobile: 214-435-8825
Secure Fax: 866-343-3688
Gold Financial Services, Inc. is a division of Amcap Mortgage, Ltd. NMLS# 129122