LOL...the stigma of the credit score

 So, I feel like this is a topic that needs to be discussed. Let me tell you a little story: 

When  I was growing up, we weren't taught how to budget, but we were taught that credit scores were a top factor is how happy or successful your life would be. I know, White people... As a teenager in college, I was TOLD that the first thing to do to increase your credit is to get a credit card and pay it off every month. Seems easy enough, right? OK, here is the deal... Credit Cards are NOT DESIGNED TO BE PAID OFF EVERY MONTH. If you have ever been invited to get a card, you'll know that you usually choose the one with "No APR for 12 months" or "Extra points if you make 10K in purchases in the first 3 months", but have you ever read the fine print? What happens after that cute little term? 

I'll tell you. 

In the fine print, dependent on your credit score and history, is a little number called APR. Its interest. A LOT of interest. Sometimes, they are even nice enough to show you a chart of how long it will take you to pay off your card and how much interest you will pay based on various options. Let's say you took the 10000 option and got your extra one way regional flight... You made some payments towards the card during the term, but still owe $6000... I'm not even going to account for the retroactive interest if they do that (WHICH IS AWFUL!). Your credit was just OK, so your interest rate is 19% and your minimum payment is $100. If you pay the minimum payment, it will take you 191 months to pay it off and you will pay over $13,000 in interest. Was the little plane ticket really worth it? Even if you paid $150/month, you'd still need 64 months to pay it off and would pay $3600 in interest. STILL NOT WORTH IT. 

I sometimes think back to a simpler time when I could hypothetically have 10K saved in the bank. On the flipside of using credit, there are SO MANY great options you can use to grow your money, rather than stretch it to please the institution, go further into debt, but have a higher credit score. Before I tell you those, here is what my credit journey looked like in a bulleted list: 

1. Got first credit card - score was low because no credit. Carried a balance, paid it off, but always kepy a lingering amount on there. score increased. 

2. Opened 2 more store cards, score went up 50 points just for having a higher line. 

3. Incurred balances on said card, my original card limit was upped to over 20K. I was 23. REALLY? 

4. Opened another card. Ran up a balance. I would pay it off later. My Score was 745. 

5. Took out a loan on a car- score went up! 

6. Payments were getting harder and harder to make, so I consolidated all of my credit card debt into a personal loan worth $30K. Score went UP! Jesus. 

7. It all came crashing down. I used a debt negotiation company (NEVER DO THIS EVER) and my score fell to below 500. 

At the end of all of this, I was defeated. I was a failure in my own mind. It wasn't wholly my fault though. I had been fooled. Now, I am working to pay everyone I owe because KARMA and try to get a liquid as I can. 

Once I get back above water, I plan to save chunks of money and put them in interest earning entities like CDs, Investments, after tax retirement plans and eventually a home. 

There is light at the end of the tunnel. YOU ARE NOT A NUMBER. YOU ARE A PERSON. remember that and do what is best for you financially, NOT THE BANKS. 


XO 

V 

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