4 Credit Horror Stories

This post is sponsored by Lexington Law. 

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It’s easy to take your finances for granted, especially when you’ve always been able to pay your bills. But hard times can happen to anyone. These credit horror stories are just a few examples of how someone’s credit and credit card debt impacted their lives outside of their bank accounts.

It’s scary to think an account you opened five years ago or a missed interest payment of a few cents could impact your credit so drastically. But the truth is that it can.

A missed payment, a forgotten credit card, a decade-old bankruptcy can all impact your ability to lead a life you love today. It can keep you from buying a house for your family, accessing benefits, and even increase your insurance premiums. Read on for four credit horror stories and learn how each individual recovered.

4 Credit Horror Stories

1. Brittany became homeless.

Brittany, like many young adults, started receiving offers for credit cards right out of high school. She opened up a few cards and didn’t think much of it. Somehow these little lines of available credit seem necessary at the time but can come back to bite us in big ways. Brittany also took out loans thinking and rationalizing as, “It’s only a little credit here and only a little credit there.” What could it hurt?

As it turned out, Brittany quickly learned that this wasn’t truly the case. After maxing out her cards and finding herself unable to make the minimum payment for her credit card balance monthly payments, her credit report showed that her credit score dropped and her debt rapidly increased. Her late payments turned into late fees which turned into financial trouble. With a lackadaisical attitude towards credit, she soon found herself homeless and unable to be approved to even find a place to live.

When she found out she was pregnant with her son, she wanted to create a better life for her family. She tried to apply for a loan for a place to live but without the credit and her past history of lack of payment, she wasn’t approved.  For her, this was rock bottom. There was nowhere to go but up.

After a consultation with Lexington Law, she went all in. She went from hopeless to hopeful as the credit repair professionals at Lexington Law worked with her goals and situation to improve her credit and her life.

Read more of Brittany’s story here.

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2. Neal’s student loans kept him from buying a house.

When he was younger, Neal took out student loans to cover the cost of his education. Can you relate? A vast amount of millennials, including many of us here at GenTwenty have used student loans to propel us through school.

He decided it was time for him and his family to buy a house. They were ready to put down roots. To prepare for the process, Neal pulled his credit reports only to be shocked to discover that old penalties from his student loans were still impacting his credit score. A lower credit score could keep him from being approved for loans and risk  high interest rates. He was 10 years out of school at this point.

But Neal’s life now is far different from when he originally took out those loans. He was being unfairly held back by his past credit history. In other words, these past grievances were stigmatizing his borrowing capability in the eyes of lenders.

Luckily, through credit repair, Neal was able to work towards removing these outdated items to begin unburdening his credit to reach his homeownership goal.

3. An old bankruptcy kept David from accessing his military benefits.

Did you know being in the military means that they access your financial history to ensure that you’re trustworthy and financially stable? For those with secret clearances, this is done so they can be sure you won’t sell secrets.

Yup, that means that your security clearance can be restricted in the event of something like delinquent or unpaid taxes. An accidental delinquency can keep service members from being promoted, can discharge them from their service, and suspend benefits.

After serving in the Marine Corps for 10 years, David became a family man and settled down in California. He returned home only to find that previous bankruptcy was preventing him from receiving the military benefits he earned through his years of service. Without knowing the ins and outs of the law, he needed help. Working with lawyers familiar with the nuances of military service and veterans, he was able to challenge the restriction of benefits. Now, he’s looking forward to buying a house at the end of the year.

4. Sydnee’s roommate left her responsible for the full rent.

After graduating from college, many of us can’t afford to live on our own for a while. Living costs are too high while our salaries are too low to cover everything. That means most of us move in with a roommate or continue to live at home.

Sydnee did just that. While she technically could have afforded a one-bedroom in her area by herself, she took on a roommate and opted for a bigger place. Things were going well at first. But by the end of the third month, her roommate got behind on rent. Rent still has to be paid, regardless of the individual tenants agreement. That means Sydnee was on the hook for the remaining rent.

This pushed her beyond her budget and stretched her bank account very slim. What she thought was a smart financial move ended up being disastrous. She had to make up the rent to avoid an eviction and a ding to her credit score, which led to a bigger credit card bill and credit card payment just to keep her good credit score.

Dings to your credit score are a slippery slope. One thing here, one thing there and next thing you know, you can’t get approved for personal loans, you’ll have a hard time getting a car loan, or anything you need to borrow for. 

Some people think that they can just open a new credit card any time they want, but that won’t prevent them from accruing interest charges after the initial grace period and it can lead to a higher rate of interest over time. Credit card limits can increase over time, which gives you a bigger line of credit but that can just hurt you over the long term if you’re not reading the fine print. You don’t want to be another credit card horror story!

Credit card companies are quick to offer a first credit card so people can build their credit, and hopefully keep a good credit score which will allow them to have lower interest rates and an easier time borrowing in the future. But, the credit card company or credit card issuer will not always be able to help you get out of jam if you overextend your limit. 

If you find yourself in a similar situation to any of these credit card horror stories, or even worried about a few charges, or automatic payments that may have overdrafted your debit card, reach out for a consultation at Lexington Law. Repairing your credit can mean the difference between paying $45,000 in interest, and saving $45,000. Take control of your finances and your situation! Taking action is where the magic happens.

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