What is the “cost” of bad credit? Are people with bad credit bad people? Are people with good credit good people?
How did I obtain bad credit?
I actually had two periods in my life where I had to pay for bad credit. One time it was my fault and one time it wasn’t.
I came from a broken home. I wasn’t taught how to manage money. I wasn’t taught about budgets and cash flow. It’s ironic because ultimately I became the CEO of an insurance company.
As a result of my upbringing and attitude, when I was first married I spent money on anything I wanted. In fact if my wife wanted something, I saw she got it.
We went out to eat all the time. We took weekend trips we didn’t have money for. We did all this instead of paying bills.
When I failed to make credit card payments, car payments and home loan payments on time my credit score took a major dive.
Ultimately to keep our home we had to get a professional debt consultant to negotiate for us. Despite this we had to pay about $50000.00. What I found when I faced up to the debt was that while the interest was a killer, companies pave the road with penalties.
However paying the money back under duress wasn’t the only problem. I watched as my friends got equity in their homes and paid their cars off. Some of them even moved from their starter home to more expensive neighborhoods.
However, that isn’t the greatest price. I found I couldn’t get the smallest of loans for the greatest of emergencies. And, it got to the point where my word meant nothing to anyone. I got a reputation as a “deadbeat.”
I “grew up” and dug out of that hole early in my life.
Sadly a few years later I was back in the same fix. This time it wasn’t my fault.
My second son had an illness that local doctors failed to diagnose. Time after time they would come up with the same idea and that was a urinary tract infection. For a couple of days the antibiotics would work and then he would relapse.
Ultimately we took him to the Mayo Clinic at our own expense. He had inflammatory bowel disease. At the same time I developed a severe medical problem. The bottom line was we had thousands of dollars of medical bills. While my wife and I were digging out to the tune of $67000.00, we couldn’t get any type of credit despite the fact it wasn’t our fault.
A case could be made for the idea that if I had handled my money right early in my life I may have had plenty of reserve to handle the problems later in life.
As for the concept bad people have bad credit and good people have good credit of course that isn’t true. Anyone may have either based on their attitude, knowledge and well, luck.
I will say having bad credit is terrible. You not only compromise your finances but your reputation as well.