Sunday, March 27, 2011

My Credit Sucks

There is one drawback to reading a lot of personal finance sites. Everywhere I look online, I see stuff like this:

And it really makes me angry.

I've talked briefly before about filing Chapter 7 bankruptcy. It's one of the biggest regrets of my life - not the part where I got rid of the debt that was burying my family, but the fact that I let things get that bad in the first place. I've worked hard not to put myself in that position ever again. Unfortunately, five years later, I'm still suffering from the aftermath of my financial transgressions.

My FICO scores are in the low 600s right now. That means:

- I can't get approved for a credit card. Not that I need one, but I'd considered getting one to increase my available credit.
- I can't buy my home from my parents. They were kind enough to buy the house when I got divorced, with the expectation that I would take over the mortgage as soon as I was financially stable. I know they aren't hurting themselves, but I can't stand knowing I'm not taking care of my responsibilities. They won't accept rent, saying they'd prefer I get out of debt and build savings. It drives me insane.
- My son will need a car in less than four years. While I'm saving for that now and think it's dumb to finance a car for a teenager, I keep thinking I might have to finance a small part of it if an emergency eats into his car fund. My bankruptcy will still be on my credit report and I worry that I won't be in a position to help him get something reliable.
- If I wanted to change phone providers (not right now, but someday), I couldn't pass the credit check and would likely be required to put down a deposit despite 10 years of paying my phone bill on time.

Bankruptcy is NOT all bad. At the time we filed, we literally did not know how we would buy food or pay the utilities. I'm thankful for the opportunity to say, "Okay, I've totally screwed up and would like another chance." I just wish I would have come to that realization before things got so horrible. Now for another 4 years or so, I have to continue suffering the consequences of my past mistakes. That's the biggest lesson I can think of for anyone in this situation - you can't run from your mistakes, ever. 

If you're considering bankruptcy, please consider the impact on your financial present AND future. If there is any alternative, use it first. And don't file unless you're sure you are ready to change. One of the most helpful resources I found was a forum for people considering or involved in bankruptcy 

For now, I have to live with my crappy credit and do my best to improve it. I'm using Credit Karma to monitor my credit for free as I pay off debt. This month, I'm down to utilizing 10% of my available credit, which is what finally pushed my score above 600. I would definitely recommend Credit Karma, not because they asked me to say so (I'm not that important!) but because the service is really cool and tells you what the problem areas are on your credit report.

Hopefully someday I'll be able to write a post called "My Credit Doesn't Suck Any More."

Edited to add: My friend at Money Ning just posted about getting out of debt without bankruptcy. Go check it out!


Frugal Forties said...

I'd like to write that "someday" post as well. I haven't declared BR (although I've considered it) and my score is currently below 600. I'm working on it though.

Alltid Blakk said...

Hello, just dropped by and finding your blog interesting. I'm also a single mother with a low income, and just like you trying to get my self back on track.

One thing puzzled me though, why must your son have a car when he's 18 ? My oldest is 13 year, and I can't see myself buying a car for her, ever. Her drivers license, yes - but car no. But then again we live in Europe, so ... things are different

Andrea said...

Hi, thanks for visiting! Yes, I'll be purchasing my son's first car sometime between his 16th and 17th birthdays. We live in a rural area with no public transportation of any kind, so the only way to get anywhere is by personal vehicle. Since I drive my car to work (an hour from where I live!), he'll have to have a car of his own. I'll buy the car, but he'll be responsible for his own insurance costs. And if he wrecks it, he'll have to save up enough money to buy another one. It's fairly common here for parents to buy the first car but that's it!

I'm interested in the cultural differences as far as cars go - how will your daughter get to the places she needs to go when she's older? Is there public transportation in your area?

Alltid Blakk said...

Well, there are buses, but not so popular (don't really know why) so youths just have to coordinate how to get where and back again. There's always somebody that can borrow a car. Mind you cars are very very expensive. A cheap one would cost something around $1700, and the gas is $8,75 (ca) per gallon. Then there's parking...

Please forgive me, but I still don't see why he must have a car. Sure it's not fun being the only kid without a car, but he'll survive. Wouldn't it be more important to have money for college ? Where would he get the money for gas and insurance, maintenance ? should he work, what about school?

Andrea said...

I guess it's hard to explain when we come from such totally different places. When my son is old enough to drive, he will need a car to get to school, participate in after school activities, go to work, or anything else he needs to do. There isn't an option to walk or ride a bike to school - his school is nearly 10 miles from my house. There are no stores or businesses within walking distance. It's typical for teenagers to get a job after school and on weekends to pay for the expenses of owning a car.

If he doesn't have a car, I'm sure he could get a ride to and from school. Beyond that, though, he would be stuck at home all the time. I normally don't get home from work until around 8 PM, so he would have no way to do anything or go anywhere. The only kids I know who don't have a car are those with a stay at home parent who loans them a car. There is no option where I live to go without transportation. And most of the other kids aren't going to drive miles out of their way to take someone all over the place.

Alltid Blakk said...

ah - I see. My kids has only 2 miles each way to their school. and only 4 into city center. Mine can walk. It's a bit different if it where 4 to school and 8 to the city :)

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