This article is brought to you by Credit Repair
It’s no secret that having good credit is one of the most essential parts of your financial well-being in adulthood. And there are plenty of articles here on TFD that stress the importance of being proactive and maintaining your credit, because it’s one of the most important tools we get to use throughout our lives.
Unfortunately, good credit is something that can be destroyed just as easily as it is built, and I know exactly how it feels. When I maxed out the $5,000 limit on my first major credit card at age 21, I initially didn’t understand the extent of the damage I had done. However, when that outrageously high balance combined with the outrageously high interest rate, it caused my monthly payments to skyrocket to $440, which was way beyond what I could afford. Within six months of not meeting my payments, my account went off to collections. And as if it’s not already crappy enough knowing that you’re struggling to pay the bills, the system that judges your creditworthiness isn’t exactly the most forgiving. Derogatory marks, such as having an account in collections, are required to stay on your credit report for seven years, regardless of whether you pay them or not.
This kind of situation puts people in a terrible place. After all, our ability to make many major financial decisions (like buying a car or signing a lease) largely depends on the quality of our credit scores. So when I discovered my debt was officially going be charged off, my confidence was shattered. As a result, I spent several years feeling helpless because I was unsure of how it would even be possible to recover from this mess.
The good news is that I’ve recently learned there are ways for me to still fix my credit, even with my past mistakes. In fact, there are professionals, like the agents at Credit Repair, whose mission is to help people like me develop lifelong strategies to increase and maintain my credit score, so I don’t end up in such a troublesome situation again.
When I look back on how I initially handled my debt, I realize most of the obstacles I encountered were the result of being too embarrassed to ask for help because I didn’t want people to judge me for it. But because I believe reflection is a necessary part of growth, and because I think it’s important for us to learn from each other, I’m prepared to fully discuss the struggles I faced, and consequently, the mistakes I made because of them.
Mistake #1: I Ignored The Phone Calls
To no surprise, the collections agency that held my debt was even more adamant about getting my money from me than the original creditor was. Once those calls started coming, (as I’m sure anyone who’s been here knows), it didn’t matter how much I ignored them — they did NOT stop. But I refused to answer because I never felt like I was ready to confront the reality of my issues. Answering the phone meant admitting out loud to a stranger that I was a grown, adult woman who had failed at the very straightforward task of paying bills on time, and to me, that was beyond embarrassing. It was shameful.
As a result, I told myself I would pay my collections debt all at once when I had a better job and more money to spare, even though I had no concrete plans to make this goal a reality. Yet somehow, part of me felt slightly better convincing myself I was buying time, and that I could just wait the seven years for the collections account to fall off my report. Unfortunately, this wasn’t doing anything other than drawing out the process, because ignoring my debt like some kind of clingy ex-boyfriend was never going to make it magically disappear.
I soon realized there would never actually be a moment where I truly felt 100% “ready” to deal with my debt. And once I overcame my fear and talked with someone about my situation, I felt much better, because I had finally taken that first difficult-but-necessary step toward making things right.
Mistake #2: I Didn’t Consider My Options
It didn’t take long for me to feel overwhelmed by the pressure to take any action that would put an end to my charge-off nightmare for good. I decided to sell my car for cash on Craigslist to satisfy the bill in full, which forced me to quit my job and uproot my life so I could move somewhere with a walkable commute. This had a devastating effect on both my finances and my mental health, but I truly felt like I had no other choice. I later learned that I had significantly more options for satisfying my debt than I thought. The bottom line is I’m certain that had I actually talked to someone, like a Credit Repair agent, about my options instead of acting out of fear, I probably would have saved myself a lot of stress through what was already a pretty stressful experience.
Mistake #3: I Didn’t Build New Credit To Offset the Bad
Remember how I said I sold my car so that I could pay off the account for good? I did this because I saw it as the only right thing to do, and I expected that I would see my “smart decision” reflected in my credit score. And while it did change, it didn’t grow to anywhere near as much I’d hoped, given the sacrifice I made to pay off the freaking account in the first place. I later learned that simply paying off a debt without opening any new accounts actually does very little, if anything, to help your credit.
It turns out, if I wanted my score to improve beyond the very sad state it was in (and when I say bad, I mean low 500s bad), I needed to start adding some good things to my report to counteract all the negatives. Of course, in my mind, this was basically the equivalent of telling a someone with multiple speeding tickets that they needed to go out and start driving a brand new motorcycle for them to get their license back. I just straight up didn’t trust myself. But one of the most difficult but necessary parts of becoming a financially responsible adult is learning how to self-discipline your actions. For example, one option I wish I explored earlier was opening a secured credit card so that I could practice developing that self-control without risking default. If getting to a good credit score was driving a sports car, then these were the training wheels I needed. Either way, I’m pretty certain had I spent more time being vigilant about building good credit, rather than wallowing over my past mistakes, my score might look a lot different today.
Mistake #4: I Didn’t Look At My Full Credit History Until Years Later
As you can probably imagine, this whole fiasco led me to develop a vested interest in my credit. I began checking my scores online weekly, hoping to one day see mine move from the “poor” level into the “good” again. But by the time I actually looked at my full credit report, I was shocked to learn one of the bureaus was still incorrectly reporting my charged off account as past due, even though I had paid it years earlier. This is important, because while my charge-off was set to inevitably remain on my record for seven years, whether its status read “past due” or “paid” actually does matter. Specifically, it demonstrates to potential lenders that I took the initiative to pay my debt even after it went to collections, which speaks volumes about my willingness to be responsible, even after making mistakes.
And as it turns out, my situation isn’t out of the ordinary. A 2013 Forbes article cited a study that revealed one in four Americans found at least one error or inconsistency on their credit report, which suggests there are likely millions of people, like me, who are missing out on opportunities due to completely amendable mistakes.
Of course, the process of actually fixing these errors can be incredibly tedious and time-consuming, often requiring multiple written forms of correspondence. This is another instance where using Credit Repair can be extremely beneficial, because their agents know exactly how to engage and follow up with the bureaus to ensure that any inaccurate information is removed from your report.
Because at the end of the day, most people simply don’t have the time to be writing formal letters to credit bureaus, let alone an understanding of the legal jargon necessary for an effective dispute. Therefore, it makes sense to get the help from people who already understand what to do. At the end of the day, the mistakes we make (especially in our youth) shouldn’t result in a life sentence that bars us from having good credit or even more importantly, reaching our future goals. Thankfully, companies like Credit Repair are there to help us get back on track, so that we never have to put those decisions on hold.
Savanna is a freelance writer in Northern California whose hobbies include all things theater and dog-related. She hopes for a world where avocados will be included in the price of her entrée and a 12-step program is widely available to people who obsessively collect air miles. Follow her on Twitter here.