John Oliver’s Credit Rant — What Can We Learn

The topic of credit is many things, but it’s rarely funny. A recent comedy sketch by late-night host John Oliver changed all that when his Last Week Tonight opener took aim at credit reporting inaccuracies and the problems they create. In a more serious moment, Oliver conveyed the significance of credit scoring in nearly every area of life:

“You might be surprised at just how many aspects of your life your credit report can affect, because it’s not just banks deciding whether to lend you money; it’s also landlords deciding whether to rent you an apartment, insurers setting your rates and even employers using it to decide whether or not to hire you.”

While the 18-minute sketch is hilarious, it’s also an informative look at how credit damage can change the landscape of your life, including:

Employment

Oliver’s sketch pointed to a 2012 survey that revealed 47 percent of employers— including people who run fireworks tents — run credit checks during the hiring process. As a modern-day marker of career qualification, a bad credit score could eliminate you from the job pool regardless of your professional skills.

The fix: Employers cannot check your credit without permission, and it may be wise to decline — or, at the very least, provide context — if your credit rating isn’t the best. It is better to plan. Focus on credit repair as you plan your next career move. Interviewing with a good credit score is the best way to let your merits speak for themselves.

Money Management

Experian claims that strong money management skills often imply strong credit skills as well. While income isn’t a factor in credit scoring, the basis for this assumption is valid. It’s not the amount of money you earn but rather the application of funds that determines your credit health, e.g., paying bills on time, keeping your credit balances low, saving for emergencies, etc.

The fix: Review the Five Factors of credit scoring to learn how these items affect your rating.

Debt

Oliver jokes that there is no correlation between fraud and personal debt, but there is definitely a correlation between debt and credit damage. According to the Consumer Financial Protection Bureau, “52 percent of all debt on credit reports is from medical expenses.” Credit damage due to illness is an unfair disadvantage for millions of Americans every year. Thankfully, a recent move by the credit bureaus prohibits reporting medical debts before a 180-day late period has expired, allowing insurance payments to be applied to outstanding balances.

The fix: Check your credit reports every six months to ensure that your debts — medical included — are accurately reported.

Errors

A Federal Trade Commission study revealed that one in four consumers has at least one error in their credit report. For one in 20 consumers, that error causes enough damage to interfere with securing new credit or a major loan for a car or home.

The fix: As with debt, it’s vital to check your credit reports regularly to ensure accuracy. Visit AnnualCreditReport.com to order free copies of your reports from Equifax, Experian and TransUnion. Review each report carefully and highlight any mistakes you find. You’ll need documentation when you dispute the issues with your creditors and/or the credit bureaus.

Mistaken Identity

Oliver showed a past interview with Judy Thomas, an Ohio woman whose life was unhinged when she was mistaken for Judith Kendall, a Utah resident. The error left Thomas unable to secure new credit and she was facing collection calls for debts she never incurred herself.

The fix: Begin by using the same name on every application or official document. For example, David Stephens might be mistaken for Dave Stephens or David K Stephens if he fails to use the same name consistently. Track your debts carefully to verify they are yours and not the result of an error. Contact the credit bureaus immediately if you suspect a problem. Mistaken identity is difficult to control as a consumer, but it should be dealt with as soon as possible.

Prolonged Repair

Judy Thomas struggled for six years to repair her credit as a result of mistaken identity before hiring an advocate who helped her regain control. Solo credit repair is the right of every consumer, but it’s usually not the quickest route to take.

The fix: Consider the costs of prolonged credit repair as you begin the process. Spending more on insurance premiums, interest rates, late fees can add up quickly.