From the time you graduate high school, besides going to college, the only thing that any one ever talks about is credit. You would think since credit is such an important factor in our lives the powers that be would teach a course on money management in high school or personal finance in college but they don't. That just makes you wonder if the system was designed to keep those who don't know down and generational wealth up.
As a young woman, I always had a decent job(sometimes two or three) and I made sure to save my money for a rainy day. At the age of 19, I had a 710 credit score and at the age of 22 that score was 730. I paid my bills on time, my credit cards had high limits and I was able to pretty much keep myself afloat. With the progression of time, and my desire to be self sufficient, I ultimately drowned in debt. I ran away from the mail lady, man, UPS, FedEx and even DHL. I learned the names of bill collectors, their sneaky tricks to get you to open their envelopes not limited to sending envelopes that looked like checks or packages marked "sensitive", "urgent" or "you don't want to miss this". My credit score plummeted. It was like the SATs where you get 300 points just for writing your name. Besides the agony of the low numbers, I couldn't get a bank account. I couldn't apply for a loan and when my family needed help, I couldn't have any utilities in my name. Having a low credit score not only fucks up your borrowing life but prevents you from going back to school. Possibly buying a house, getting certain jobs. And definitely forces you to put up more money when renting an apartment. I seriously considered doing bankruptcy so much so that I went downtown Brooklyn to the courts to start the bankruptcy proceedings in New York. After one of my debts magically disappeared off of my credit report(good ol 7 year rule), I decided to re-evaluate my stance and make a sizable effort to diminish the amount of my debt or at the very least increase my credit score.
Regardless of all that, there is a light at the end of the tunnel. You can still live after fucking up your credit and you can be proactive. Since I was no longer able to get a bank account at any of the normal banks, I got a prepaid debit card. It became my primary card, 3 years later I still have it today. There are no fees associated with the card except ATM fees. No overdrafts for being poor. 7 months ago, I opened a savings account with my prepaid debit card. Allowing all my accounts to go to collection put me in a position to barter with them significantly bringing down the amount I owed them and almost 100% of the time avoid paying the exorbitant interest fees. I learned the laws regarding credit. I fought every MCN creditor that came my way. I disputed all the stuff on my credit report. Your credit score is a numbers game but cash is king. There are things like THISISALICE which helps you build your credit while you pay for your transportation. They don't deny you, they won't send you a letter explaining their decision. I also make sure that I save 35% of my income. 17% of that 35% goes to my 401k that I can withdraw from in case of an emergency. A 401k plan is a no frill loan account for those with terrible credit. As of now, my student loans are up to date, I pay $5 per month. In September, I will be able to return to school and that will put a freeze on my loans accruing interest.
Here are some tips for people who are struggling with credit. CreditKarma is a great place where people who have beaten the odds go to share their various experiences.
1. Get rid of your bank.
The fees that accumulated from being poor was more often than not an additional bill. One time, I had a accumulated $150 in fees that the bank refused to give me a pass on. Prepaid debit cards are more feasible for people who have a problem planning or those who like myself love to swipe without looking.
2. Set realistic goals
One of the most prevalent issues I had with saving after my credit score disappeared was being realistic. I was 24 years old with a rent of $800 bringing home $900 a check. It was impossible to save $600 every pay period when things needed to be paid. So tell the truth, don't lie to yourself success comes easier that way.
3. Don't procrastinate
The famous saying is good things come to those who wait but that's not always true. The longer you wait to dispute or take care of credit card claims, the more detrimental it will be not only to your financial health but your mental health as well. Oh the anguish!
4. Apply for a CreditOne card
If all else fails and nobody is approving you for a card(not even Victoria Secret) credit one takes EVERYONE. Be sure not to abuse it and pay it off in a timely manner. Don't bite more than you can chew.
5. Creditors are bullies, don't be afraid to fight back
Collectors are trained to ask you what can you pay today. Don't be ashamed to say nothing. Don't be too afraid to say I don't owe you because you sold my debt. These small statements can be the difference between unknowingly admitting to a debt and winning the battle in court.
6. Credit is not a one size fits all
What worked for your best friend's debt may not work for yours. Exploration through trial and error is the only way to know what works for you. It's perfectly okay to turn down advice and it's normal to question things you read on line.
How's your credit? Have you had any issues in adulthood with school loans or credits? How did you manage?
Also, check out this article on the balance for some necessary information on credit.