College co-ed has bad debt, good questions

Dear Debt Adviser,
Even after I pay my bad debt, I know that they remain on my credit record for seven years and that still affects the person that I marry. But I’d like to know if having a bank card helps with my credit score if the card is affiliated with Visa? I did a free credit score estimator and my score ranged between 500 and 525. Just how bad is that? I’m a college student and I have had a few bounced checks … and I’m trying to make it right and pay all my bills as well as go to school on a part-time job! Help! Thanks.
— Erika

Dear Erika,
The good news is that a negative credit score of a young person new to credit is easier to improve than a score with a lot of negative history. Plus, you are showing signs of a brighter future by the questions you asked about paying your bad debt and improving your credit. So let’s answer your questions in the order they were asked to get you started!

Yes, you are correct when you state that most negative information that is accurate will remain on your credit report seven years from the date of first delinquency. As to any effect on the person you share marital bliss, it depends on the state in which you decide to live and the state of your future credit hygiene. If you live in a community property state, then you and your spouse to be will be responsible for any bad debt incurred after your marriage. Your future spouse would not be responsible for the debts you bring into the marriage. No matter where you live, if one of you has terrible credit, then any joint borrowing will either be expensive or just not available.

As you may have surmised, a score in the 500s is not desirable. Actually, it places you in the lower 7 percent or so of credit scores. The poor economy, housing defaults and so on have conspired to increase the distance between the credit haves and have-nots. Here’s an example: If you applied for an auto loan, you might expect to pay 18 percent interest for the loan whereas I would be looking at less than 6 percent.

Having a credit card that is affiliated with Visa does not enter into the credit picture. The Visa designation just means that any transactions you make on that card are processed through the Visa payment network. A lot of people mistakenly think that Visa is lending them money. Your local creditor is doing that. The account will help to improve your credit score as long as you make your payments on time and for the amount agreed.

Because credit reports are often used in apartment rental and hiring decisions, I suggest that you try to get your credit grade up before you graduate. Paying off any bad debt is important. While bounced checks are not reported to the credit bureaus, they are likely to be reported to the check verification companies such as TeleCheck and ChexSystems, which could make it difficult for you to open a new checking or banking account.

Enough negative information, let’s get you some positive help! The first place to start improving your credit is to get your balances below 50 percent of your credit limits and not add any new debts. Next, go to for a free copy of your reports from the three major credit reporting bureaus. Take a look at the bottom of your credit reports, at what are called “Reason Codes.” They tell you the reason your credit may be suffering. Follow the advice given there to improve your credit. These may include paying any delinquent accounts, bringing down your balances on credit cards and/or establishing a different type or new account. Only pursue this latter option if you can manage the account successfully. You can get more information on improving your credit at This is the official FICO Web site and it has some great information.

They say that credit reports are the mirror image of your finances. If this is true, then once you clean up your credit, you’ll be looking in that mirror asking, “Who’s the fairest of them all?”

Good luck!

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