| How to Learn about Your Credit Score, Part 2 |
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The use of credit reports in making employment decisions has also come under fire as being discrimination. Brenda Matthews, an African-American, had her job offer from Johnson & Johnson rescinded after the company reviewed her credit report. Brenda Matthews's lawyers say that African-Americans have historically been discriminated against in the credit market and that this is reflected in their credit reports. The Equal Employment Opportunity Commission has previously ruled that in some circumstances failing to hire someone because of poor credit may be considered illegal discrimination, but that each case must be judged on its individual facts. According to the Federal Trade Commission, in order to justify a company policy of evaluating a job candidate through his or her credit report, the company must show that creditworthiness relates somehow to the job, as well as being consistent with business necessity. Proponents of using credit history for hiring purposes argue that an applicant with a great deal of debt is more likely to steal. Your FICO score does not consider your age, your race, sex, marital status, job, or where you live. Your FICO score also does not consider the fact that you may be using the services of a credit counselor either for you or against you in determining your score. For years, there had been a concern that the constructive step of working with a credit counselor to improve your spending and credit habits would actually be used against you when you applied for credit. Your FICO score is regularly updated and recalculated using the latest information that comes into the credit reporting agencies. Because that information is just a bit different every time your file is looked at, your score will fluctuate as well. According to a study done by Experian, the credit-reporting agency, the state with the lowest average credit score is Texas with an average score of 653. The state with the highest average score was North Dakota, although its small population may affect the state's high average score. North Dakota ranks forty-seventh of all the states in population, thereby putting a lot of pressure on individual North Dakotans to maintain their good credit ratings to ensure state bragging rights. The national average credit score was 678. The Experian scores, which it calls PLUS scores, are similar to but not identical to the FICO scores. Not surprisingly, in calculating your credit score, being 30 days late is worse than being 90 days late. However a 30 day late payment that occurred within the last month will hurt your score more than a single 90 day late payment from six years ago. And believe it or not, according to Fair Isaac, between 60 percent and 65 percent of all credit reports contain no late payments. When settling an overdue bill, make a condition of any settlement you make with your creditor that it request that the credit reporting agency remove any negative remarks about your account and instead report the debt as having been paid satisfactorily or paid as agreed. This will help your credit score. |
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