Why My Credit Sucks, But Not Totally

Ok so when I talk about my credit, I don’t even include the student loans I have. Thanks to laws and bills here, I don’t have to pay back anything until I make over $25,000 a year.  Sadly, I make well under that, even in gross pay right now. This also means I’m safe from huge payments, and can chip away at my loans slowly for now. this is a big plus for me right now.

A huge negative is my credit cards. You see, while I was looking for work, I still needed to live. I managed to work enough odd jobs and get enough benefits to cover my rent. But things like food, clothes for interviews (all second-hand stuff, mind you), and transportation (busses for the most part) still needed to be taken care of. Then, after I found work, I found out that my hours drop DRASTICALLY in the new year (from 40 hours a week plus Sunday overtime, to zero hours scheduled for two weeks straight). If I scrimp and save my paychecks, I can pay my rent and credit card minimums. But there’s no money left for food (unless I get called in for shifts, which look pretty likely this year!). In the past, I took a temp job at the University, but the last few months there hasn’t been anything available for me.

So, I put things on credit. It’s not like I’m out buying Gucci handbags and Fendi wallets. I’m buying on sale Mr. Noodle and some “priced to sell TODAY” veggies to throw in with them. I’m buying “Buy tonight, cook tomorrow” meats at a huge discount. Basically, I’m buying bargain groceries. This stuff adds up over time though. And there’s always a little something else you need to get. New interview pants because yours ripped or you lost some weight (from not being able to afford food). A bottle of the cheapest wine you can find to give to a friend for her birthday. A package of bus tickets you try to stretch as long as possible.  And this just adds up even more.

So, I’ve dug myself a pretty sizeable hole. Between 4 credit card and a line of credit, I’m looking at hitting the $30,000 mark this year if I don’t do something about it.

My biggest problem is the interest. I’ve read all the books, I’ve watched the shows (Gail Vaz-Oxlade you are my Queen!!!), I know that interest is a what kills you in the end. I really had no idea how bad it was until recently.

On my largest credit card balance, I owe a minimum of around $250 a month. Of that, $240 is just the interest accrued that month. That means I’m only paying off $10 of my debt each month!

So, I spoke to a financial advisor. At my job, I’m only classified as part-time, which is not a good thing when you’re looking to borrow money. Actually, that is the kiss of death for most people. But in my case, she is hopeful that we can at least get a large chunk of my debt consolidated into one payment with a lower interest rate. Why?

1. I MAKE PAYMENTS ON-TIME

The last time I was late on a payment was 8 years ago. Even then, I notified my bank that there was a problem with my paycheck and my credit card payment would be a week late. I’ve only ever missed one phone bill payment, which I paid in full the moment I I realized it and talked to my phone company about as soon as I could (my mother was in the hospital, the doctor told her she was going to die, and I was more than a little pre-occupied at the time). My point? I made my payments! And the rare time I didn’t make them on time? I made sure to apologize, explain myself, and beg for mercy. A lender doesn’t HAVE to keep lending you money. Legally (and laws vary depending on state/province, so be sure to know yours) you can miss or be late on X amount of payments before you suffer any true consequences.

I make sure to have my payments in on-time each and every month. And the credit companies take note of that.

2. I PAY MORE THAN THE MINIMUM

No, I’m not paying my balance in full, like all the experts tell me to. But if my payment is $50 for the month, I’m throwing down at least $75-$100 on there. Not only does that free up more credit if I need it later in the month, but it also shows commitment. My lending companies know that I want to pay things off, and I’m not going to just sit around doing the bare minimum to do it.

When I spoke to a financial advisor this week, on thing she emphasised was that I was paying a good $100 more a month than the minimum on my largest debt, in an effort to make it go away. This is a huge factor in determining what I CAN pay and what I WILL pay if my debts are consolidated, which affects the amount they are willing to lend me to do this.

3. I STOPPED SPENDING WHEN I DIDN’T NEED TO

Coming up closer to Christmas, my online spending increases (hello Amazon deals, you saved me TONNES for Christmas). BUT, what I spend on other credit cards decreases (I have on card dedicated to online purchases). I didn’t touch two of my cards for a month and a half! And this is huge for your credit score!

To bump up your credit score, on thing you need to do is show that you don’t need to spend your available credit. I tried to do my in-person spending (clothes, shoes, things someone needs to try on or physically test before they buy) in the warmer months. Then, when I know I’ll be spending money online in the colder months, I put away the cards in my wallet. Now, if I don’t have the cash, I don’t buy it. Yes, it sucks. Big time. I went hungry more than a few times, had to live on ramen noodles again at times. But giving those cards a break shows that I’m not dependant on them. This is huge when it comes to determining your credit score.

Basically Sunshine, I’ve messed up my finances pretty damn bad. Once, when I was really drunk, I ordered 60 pairs of false eyelashes from China. Thankfully that only set me back like $20, but that’s the kind of stupid thing we all do from time to time. I’ve tried to show, especially in the last few years, that while I’ve been entirely stupid with my credit, I get it. I need to pay it back, I want to pay it back, and I’ve put some effort into paying back.

As I said, I have multiple cards. Sometimes, just paying off one card (while keeping up payments on the others) is enough to put a huge boost in your credit score. And your credit score determines a lot. Right now, my score is low enough that i can get a mortgage, but at a horrible rate. My goal is to bring that up to a decent rate by the end of the year, and be looking to buy a home just after next Christmas.

This isn’t an exhaustive list of things you can do to help your credit score, but it’s a start. Talk to a financial advisor if you’re in a bind. Trust me, Sunshine, it helps.

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