Editorial Policy

Job, bank account, home come before getting a card

Erica Sandberg

April 14, 2016

Q Hi Erica,
I’m writing for a friend who is trying to dig himself out of homelessness. Marcus was living on the street for four years. (He recently got in touch with me by way of Facebook). My wife and I are trying to help him pick up the pieces, and he has been staying with us. We are trying to get him a job and a real life. Even a credit card, but can he can qualify for one? Eventually, he will need credit to get a place of his own. Erica, he’s a good guy down deep. We played football together in high school. I appreciate your help. — Everson

A Dear Everson,
What kind, compassionate people you and your wife are. Not everyone would bring a troubled friend into their home. Marcus is lucky to have reconnected with you.

To obtain an unsecured credit card of his own, Marcus would need to complete an application listing such information as his driver’s license and Social Security number, his date of birth, what he earns annually and an address. Upon receipt of the application, the credit issuer will check his credit reports and scores to see how he has treated financial obligations in the past. If he appears to be a responsible person with the ability to pay whatever debt he puts on the card, he will qualify.

I understand that your friend is lacking in some key areas — the most important being a regular income. That ought to be the first step. Any job will do as long as it’s steady, and if he’s receiving a form of government assistance, that also is considered income and he should list it.

Regarding the home address, if he can use your address temporarily that would be marvelous. In general, credit card issuers will not accept post office boxes on card applications. (Once approved, an issuer will let a cardholder change a street address to a post office box later.)

Marcus needs to check his credit reports to see where he stands. He can get his credit reports for free from annualcreditreport.com, and it will take only a few minutes to pull up his complete file online. He may have had past problems with creditors, but some of the negative information may be so old that it’s not that relevant now or may even have dropped off the reports altogether. Most negative information, such as late payments and accounts that went to collection agencies, is listed for a maximum of seven years.

If Marcus has credit reports filled with recent unpaid debts and he has no money to cover them, either in full or partially with a debt settlement, his chance of getting an unsecured credit card plummets. Also problematic would be a thin credit file; that’s when there is little or nothing reported about his credit history.

A secured card would then be a good option. If Marcus can scrape together a few hundred dollars, he can put that down as collateral and an issuer may provide him with a secured card. As long as the credit issuer reports to the three credit reporting agencies (TransUnion, Experian and Equifax), Marcus can use the card to build a fresh and positive credit history.

A bank account is also an important step toward independence, and for that Marcus also will need to provide identification and a home address. If you can help him by letting him use your home address temporarily, that would be wonderful. This way he won’t have to turn to check-cashing businesses, which are terribly expensive.

If you think Marcus could use some personal finance guidance that is above and beyond your purview, a nonprofit credit counseling organization is a great place to get it. Credit counselors offer free budget and debt advice, can discuss the basics of the law as they pertain to creditors and will make referrals to other resources. Plus, counselors will relieve you and your wife of all those duties. Helping someone in this way is gratifying (and noble), but it’s also time-consuming and difficult. Bring in the professionals whenever you can.

I wish you and Marcus all the best. You’re an amazing teammate.

SEE ALSO: How a secured card can help you build credit

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