I never understood the value of having good credit until it was too late. I remember the first time that I really needed to have good credit and I didn’t. Like most people, my credit problems began when I was in college. My parents never taught me about spending, saving, or about paying bills. For the most part when I left for college I was on my own.
Because I had worked through high school and some money saved I wasn’t too worried at first. But no one ever told me that life was so expensive. Now I know why my parents argued about money for all those years. By my second semester my savings were nearly depleted and I had begun applying for credit. I received a bank loan, a cell phone, a car loan, and a new credit card all in my name.
Soon after, my money troubles drove me to work and my grades suffered. I had always been an A student but when I had to start working in college I suddenly realized I did not have enough time. I became a resident assistant to save money on my housing fees which gave me even less time. I was working part time at night as a manager making pretty good money. But it was never enough.
I struggled to pay my bills after graduating from college but I still did not learn. In my early twenties I applied for and received a high line of revolving credit. Within six months the account had been closed due to non payment, meaning that I still had to pay for the credit but they would not extend credit to me in the future.
Each month my bills began increasing more and more into the thousands because of late fees and refinance charges. When you don’t pay your bills on time you are charged late fees. Typically late fees range from $35 and up. When you don’t pay your bill for a couple of months at a time you may loose your interest rate. This interest refinance will cost you. My refinance charges on the revolving credit were around $120 and my interest jumped to 18%.
Now, these numbers may seem small but when they are added up two, three, or four times it can be quite a large amount of money. Every month you don’t pay your bills it just adds up. Not paying your credit off is not a good idea. If you ignore it, it will just get worse.
The best thing that you can do is go to your bank or call your creditor if you are having problems. Speak to them about getting a payment deferment until you are back on your feet. Sometimes creditors will also work with you on a reduced payment plan if you can afford to pay some or most of your bill. The latter is usually the best option. Even if you can only give them $10 a month, give it to them. They want to know that you can at least give them something.
Whatever you do, do not apply for more credit. Inquiries on your credit report will make your score lower. One time I had 12 inquires on my credit within one month. In that same month my credit score dropped over 100 points. I was trying to buy my first house and I couldn’t get approved for a loan. Originally I was pre-approved a month in advance but my credit was suffering because of unpaid bills and the high amount of inquiries. When my mortgage banker told me there was nothing he could do I felt like my life was over. Tears welled in my eyes. At a time when I needed my credit the most I didn’t have it, and it would take a couple of months to improve which was just too long.
Since then, I have learned to take responsibility for my credit. Now I have all ones on my credit report for good payments. I never realized how important good credit is. Whether you are trying to buy a car, a home, or get credit card it is extremely important to have good credit. Pay your bills on time every month and call your lender if you are having trouble making payments.
Most financial institutions I have dealt with are much happier to see me come speak with them than to not pay the bill. Usually they work out some sort of reduced payment plan for me. I have also received payment deferrals from time to time when I just couldn’t afford to make payments. If you loose your job or you have a drastic change in your financial status it may be wise to ask for a deferment.
I can’t say it too many times. Having good credit is very important if you plan to have the things in life that you want.