What do you do when you have bad credit? You can do what I did, run and hide, take part in the general fear and loathing amongst creditors Americans are known for and if you’re either paying part of a bill here or there or not paying any bills at all whatsoever, except for what it takes to get by. I started off easily enough; passed up a $20,000 Visa card in leiu of a $300 store card for the local department store. Ended up spending that $300 in a few months, and had enough interest and late charges to accrue $600 in debt. This is someone who would have a credit card for around a month to a month and a half, had spent up all of the credit line and was working on either doubling the amount I owed the creditor or going 50% over my credit limit.
My Discover card; whom no one even accepts cards from them anymore, $2,700 on a $2,000 line of credit. A credit card I ended up taking out to get a car I no longer have anymore, $800 on a $500 line of credit. Student loans are forever in deferment. I ended up being completely against the wall as it became even more difficult to acquire an apartment. So now it’s me and my wife in a rather large metropolitan area and I’m juggling too many payday loans to count and I have an automobile loan I’m paying 25% interest on, one credit card I’m trying to get back below the credit limit, and the hundreds of dollars every pay period I pay out in interest make the days of sending the credit card company 50 to 100 dollars much desired.
You would be amused at the fact that I had no problem placing 80% of what I had in my pocket in the offering plate; yeah it almost my 10%. That’s right; I’m resorting to some tried and true Christian principles to get out of debt, which I should have done years ago. This much I’ve learned about credit; in the beginning they feel that you are going to make a lot of money once you graduate from school and they’ll give you tens of thousands of dollars to both finish school and build your credit for the future. If you don’t graduate, or you’re underemployed, you’re left with student loans you can’t pay back and creditors that are going to harass you beyond all belief. You would also find amusing the fact that the overwhelming majority of my creditors have written me off as I’ve done most of my damage over 10 years ago. The irony is that if it weren’t for my payday loans, I could afford to throw $500 or more at some bills and get myself out of the dog house in a relatively short amount of time.
I’m not as stingy or as conservative as I was with my money. I’ve realized that having bad credit with banks will lead to a lifetime of misery as you eventually end up going back on your word with everyone and everything. You borrow money off of your friends and family, and you neglect to pay them back. You want God to bless you, and he does, but you don’t believe that he can take care of your basic needs and you mess that up as well. Bad credit starts off easily enough; you make a few bad decisions, and you do what you can to try to make things better. Life gets hold of you and before you know it avoiding repayment has become a lifestyle, a state of mind, rather than a consequence of your inability to turn things around.
If you have bad credit, go to freecreditreport.com, which is Experian’s website that allows you to get a free credit report from the three bureaus. They’ll also sell you access to your credit report from all three bureaus, at the same website, for a minimum fee once your 30 days have passed. It’s like $9.99 a month or so you won’t miss it; and you need to understand that all three credit bureaus report different history from different creditors. At times there are duplicates; Experian and Transunion will have the same record from the same creditors with slightly differences. Typically that difference is that one credit union listed the entire account number, whereas the other only listed a partial one. You’ll also find that the credit unions will continue to list accounts that have already been charged off or are no longer being pursued by your creditors any more. You have the right to dispute any records on your report to make it read cleaner and allow furture creditors to process your report more efficiently. This will raise your score and help you in the long run.
Be selective in which accounts you pay off; if you waste time with creditors from 12 years ago it won’t make much of a difference, regardless of what you owe them. Now of course if you can afford to pay them off and your newer bills by all means go ahead and do so. But if money is tight; as mine still is, you want your efforts to make the maximum impact possible to your credit report. If you’re in the payday loan cycle and you are wasting time with banks that do not even report your transactions yet are working a line of credit that is a maximum of $500 in some states, or half your paycheck, and paying anywhere between 391% to up to 1,200% in interest you need to develop a plan to get out of that situation so you can pay back the creditors that really matter. Reduce your loans by one increment, or at least one of them by as much, when you go back. If you do have to raise the loans again, put the money to good use; preferably into something that can help you raise money to improve your credit score in the long term. Recently, I had to raise a loan I had whittled down to around $180 back up to $500 to get money to pay a utility bill. Had I continued re-loaning for the same amount, I simply would not have had the money.
Payday loans can be a source of credit, and they’ll treat you as the same resource creditors would; in the beginning I could only borrow $250 from that bank. But I’m not looking forward to paying $75 with yet another loan in interest, and I will be dropping that loan down and taking another short term loss to ease my way out of this loan. They say that credit cards will keep you in bondage, these payday loans are meth to the heroin of Visa and Mastercard. But you can still kick the habit. Once you’ve gotten away from both the payday loans and the credit cards you need to determine whether or not you want to utilize credit to build your reputation or try to live free of credit whatsoever. Some people can get by with just those two or three loans; car, mortgage, furniture payment, others simply do not make enough money to qualify for what they need with the little bit that they have. Creditors want to charge them a lot of money because they’re young and they do not have any credit history. This doesn’t mean that they will not pay the loan back, but they’re viewed as being as much of a threat. Do not allow this to discourage you everyone goes down this road.
I’m very optimistic; I finally have the tools that it takes to repair my credit and the maturity to save my credit for when I really need it. The days of using credit to purchase clothing and material goods that are without value are behind me. I’m not even that interested in using credit for emergency purposes such as the utility companies threatening to withdraw their services or to get a car fixed. All that you end up doing is using your credit to resolve a temporary situation, but unless you are aggressive about paying that money back, you won’t have it when that situation presents itself again. The average person will blow out a credit card to keep the lights on, but the lights represent themselves and are disconnected again in another month or two anyway. That car that you fix up, works for a season but the repairs on what you could afford just shines a light on the major repairs that need to be done that are outside of your reach. Before you know it you’re spending $5,000 or more of your credit rebuilding your car. Is your car a BMW, an Audi; then why are you doing this, ditch the car and ride the bus.
Credit should be used to make more money, if at all, not just to get by. But Americans have the mindset to get by, and most of us are living off of 120% of our income or more. But that can change, starting with your mindset, and in time you’re not psyching yourself out about it anymore, you truly believe it and it becomes natural to you. You stop responding to trivial offers to give you something that you do not need, like a camera phone that locks you into a 2 year contract, or a credit card you still have to apply for. If they have to check your credit to get it, you do not need it. If you have to sign for it and just call it in you already have it; if that company does not give it to you another will or already has. Bad credit is not the end of the world, but it can be the start of a long process that will force you to grow up and become more financially responsible. Utilize that opportunity to the best of your ability.