Q: How do you recover from bankruptcy? My daughter lost a very good job and got upside down with her house, so she had to file for bankruptcy. She is working now in a very low-paying job but cannot find a good job in her field of finance. Everything goes well in the interviews, but then they check her records for bankruptcy. Once they learn that she was bankrupt, they will not hire her. How can she dig out of this predicament?
A: Federal law prohibits employers from using a bankruptcy filing as a reason not to hire (or to fire or decline to promote) someone. However, most states allow employers to check credit reports, and employers are allowed to use the negative marks they find there as a reason to not hire someone. Since most people who file for bankruptcy have plenty of late payments and charge-offs leading up to the filing, that gives employers the legal cover they need to refuse to hire someone with a checkered financial past.
Interestingly, there's no research or other evidence that indicates bad credit leads to problems on the job, such as theft or even poor performance. Yet employers continue to use credit checks to screen out job applicants for a wide variety of jobs.
Only six states - California, Connecticut, Hawaii, Maryland, Oregon and Washington - restrict employers' ability to check credit reports, and often there are exceptions for jobs in finance or those that involve access to large amounts of cash.
Unfortunately, that means your daughter's troubled financial past may continue to haunt her for years to come unless she finds an employer willing to overlook it. Most negative marks stay on credit reports for seven years, while bankruptcies can stay on for up to 10 years.
Q: I would like to get my interest rate reduced on a couple of my credit cards. I've never been late on a payment and have decent credit scores. But the last time I called to ask for a reduction, the credit card company raised my rate and lowered my limit. I'm hesitant to call and try again. Any suggestions?
A: Unless your credit scores are excellent (typically FICO credit scores of 740 or above), these days you probably shouldn't waste your time trying to negotiate a lower rate with your current issuers.
People with great credit have some leverage because they can easily transfer their balances to competitors offering low rates. People with only "decent" credit usually can't qualify for those offers.
You may be able to get a better deal by transferring your balance to a three-year, fixed-rate personal loan. Check with your
local credit union first,
as these member-owned organizations often have better rates and terms.
Liz Weston is the author of "The 10 Commandments of Money" and "Your Credit Score." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or via http://asklizweston.com.