+ 100% FREE
+ Unlimited Credit Reports
+ Unlimited Credit Scores
+ Credit Monitoring Protection
+ Credit Improvement Tips
+ Automatically Finds Savings
No credit card needed
John Kiernan is Senior Writer & Editor at Evolution Finance. He graduated from the University of Maryland with a BA in Journalism, a minor in Sport Commerce & Culture, and the University Honors Citation. His previous work experience includes USA TODAY and The Washington Post.
Mr. Kiernan is a Washington, D.C. native and an avid fan of the Nats, Skins, Caps and Wizards. His favorite activities are golf and surfing.
Yes, credit card companies can indeed garnish your wages, but they typically need a court order to do so. They also have the power to place a levy on your bank account, if they find you have the assets necessary to pay what you owe, with the proper legal authorization.
In most respects, credit card wage garnishment is largely the same as any other type of wage garnishment – such as those stemming from unpaid loans and other commercial debt. Government garnishment, such as in cases of overdue taxes, child support or alimony – is a bit different, since otherwise off-limits income can be garnished and since a court order is not needed. You can learn everything you need to know about the standard wage garnishment process, both for commercial and government debt, in CardHub’s Wage Garnishment Guide.
There are, however, a few ways in which credit card wage garnishment differs from other types of wage appropriation:
Choice of Venue: Many credit card user agreements contain language dictating the jurisdiction in which legal proceedings related to the account will be heard.Cases may be directed to the state in which the issuer is headquartered, the state in which the account was opened, or the state in which most of the debt was incurred. Or, it may be the credit card company’s choice.
Whatever the circumstance, you can be sure that your credit card company will be operating in its own best interest in making this decision. It will orchestrate things so it has the most favorable legal conditions possible. This may prevent you from invoking helpful state exemptions. However, these clauses aren’t always enforceable in court, since state judges don’t really care for them.
Binding Arbitration: Credit card agreements also dictate that any disputes related to an account will be subject to binding arbitration rather than actual court proceedings. This includes questions of wage garnishment, as an arbitrator’s ruling is enforceable in court. In other words, your issuer can bypass a judge to get its hands on your paycheck – especially worrisome given the conflict of interest concerns related to credit card arbitration.
Your Debt Will Probably Be Sold: Unlike federal or state debt, in particular, past-due credit card balances are likely to be sold to private debt collection firms. It’s simply more profitable for credit card companies to cut their losses rather than pursue expensive legal action.
This may result in either opportunity or increased difficulty. On the one hand, private debt collectors are notorious for lacking the documentation necessary to legally pursue old debt. Asking them to verify your debt, or raising the issue of improper records in court, could therefore be the end of your problems. However, private debt collectors don’t necessarily have the same image concerns as large financial institutions or state and local governments, so they are more likely to act unscrupulously.
Yes and no. You certainly don’t want to use a stranger’s credit card, as that’s a crime. And you technically aren’t allowed to use a credit card that isn’t your own under any circumstances. Practically speaking, however, you shouldn’t run into any problems if you’re using a friend or family member’s plastic with their permission – as long as you’re the same gender.
Most merchants simply do not check customers’ IDs to verify that they match the name on the credit card. The one exception to this is when a credit card is unsigned or reads, “See ID,” on the signature panel. This might spur the merchant to request identification. They are not allowed to decline transactions due to a lack of ID when the card is signed, though.
So, as long as you exercise good judgment in choosing who to lend your card to and regularly monitor your account, you should be fine if you ask your child or a friend to run into a store and make a small purchase while you’re waiting in the car, for example.
Doing so doesn’t break the law; it just violates card network rules. And there’s a reason for that. Anytime your credit card is out of your direct control, it is theoretically more susceptible to fraud since you don’t 100% know how it’s handled while out of your sight. If potential fraud ever crops up on your account, it will be more difficult to determine if the charge was authorized and you may effectively have to lie to the card issuer.
With that being said, there’s a viable, above-board alternative to sharing your physical credit card – though it applies more to family members than friends. Making a relative an authorized user on your credit card will give them spending privileges for when they need it as well as help them build credit.
The simple answer is that your credit score changes whenever new information is introduced to your major credit reports. That means it will be updated each month, since we already know that credit card companies relay information to the major credit bureaus on a monthly basis.
Whether or not this monthly reporting benefits your credit ultimately depends on the average balance you carry on your loans and lines of credit as well as whether or not you pay your bill on time. While on-time payments, reasonable credit utilization and income increases will benefit your overall credit standing and approvability for a loan, the converse of those events as well as negative public records and even simply applying for a new loan or line of credit will hurt your score in varying levels of severity.
With all of that being said, it’s important to note that your credit score doesn’t matter all that much until it comes time to apply for a loan, a line of credit or a job involving a security clearance or the handling of money. Yes, bad credit leads to higher insurance premiums and may make it more difficult to lease a car or rent an apartment, but these costs pale in comparison to the price differential between mortgages for people with good and bad credit.
The best way to prepare your credit for an impending loan application is to start by pulling one of your major credit reports roughly 18 months in advance of your application date. This will give you time to dispute possible errors and devalue past mistakes. At least 12 months before applying, you may also want to open a new credit card account in order to augment your overall available credit and add more positive information to your credit reports each month. Finally, about six months before submitting your application, pull your credit again just to make sure there are no surprises.
Then, as long as you handle your accounts responsibly in the meantime, your credit score will be updated and pristine as possible by show time.
First of all, it's good that you are expressing a desire to rebuild your credit because too often people simply decide credit card use isn't for them and try to make do with a bad credit score. Doing so obviously forces them to pay unnecessarily high costs on loans and insurance premiums, not to mention the fact that they have a harder time getting approved for a plethora of things, including home and car leases, mortgages and even jobs that require security clearances or the handling of money.
With that being said, your best bet is going to be a secured credit card, for a few different reasons. For starters, no matter how bad your credit is, you can get approved for a secured card. This is because they require that you place a refundable security deposit, which acts as your credit line, both protecting the card’s issuer in the event that you default and precluding the need for high fees.
A secured card's low fee structure not only makes it easier to pay all of your bills on time, but it also gives you the option of simply locking your card in a drawer and thereby building credit without the temptation that comes with making purchases. You see, information about a credit card account is relayed to the major credit bureaus (Experian, Equifax and TransUnion), regardless of whether the cardholder makes purchases or not. As long as your account is in good standing, this information will be positive and your score will gradually rise.
While the gains won't be as pronounced as if you were making purchases and on-time payments, this is a great option for people who’ve run into trouble in the past and are nervous about repeating their mistakes. What’s more, you can also add to your security deposit over time and, in doing so, increase your available credit as well as your credit score.
You should be able to move to an unsecured card after about a year of responsible secured card use. (That means if you do make purchases, you must make them on time!)
Hopefully that helps!