Wednesday, October 18th, 2017

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Consequences of Credit: Part I

In her “Consequences of Credit” series Sanyika will address the pros and cons of credit; how having bad credit kept her from getting the job she wanted(and was qualified for), how to understand credit card offers, and ways to improve your credit score.

I never had any intention of spinning so far out of control with my credit cards. Honestly I don’t think anyone plans to make a big mess of things, it just kinda happens. At least that was the case with me.

I entered Norfolk State University less than six weeks after graduating from high school. I’d had a rough senior year and wanted to try to get a jump start on college life by enrolling in a pre-college summer course.

I never realized how much I would miss my friends, especially my boyfriend. The campus was big and I didn’t know anyone. I wasn’t having nearly as much fun as I’d imagined I would.

I was short on money and a little self conscious about hanging out; it seemed like most of the people I met had a credit card. Each time I saw someone pull out their card to pay for something – it didn’t matter what – I wanted the sophistication and “power” that they had.

I really didn’t know much about credit cards. I never even imagined that I could actually get one since I had a measly job and a meager income. One thing I did know was where to apply for a card. Since I’d arrived on campus I couldn’t walk from my dorm to class, the cafeteria, or wherever without getting stopped by a clipboard toting person asking me for a moment of my time to complete a “brief” credit application.

Most of the time I said, “no thanks” and kept walking. But one day when my homesickness was particularly high and my resistance was low, I stopped just to “talk” to the young lady who invited me to get a free portable radio for just a few minutes of my time.

As I chatted a bit about where I was from and what field of study I was considering I completed my first (of many to follow) credit card application. I had no idea that this casual conversation and short application would lead to $1,500 in credit, especially since I wasn’t wholly truthful on the application.

When I got the card, I vowed that it would only be used for emergencies – only if I really truly needed it. However, It didn’t take long for an “emergency” to come along. My boyfriend was on his way to pick me up for the weekend when his car broke down.

So I did what anyone in “crisis” would do. I charged a bus ticket. That weekend cost me $256 as I proceeded to charge a new outfit, dinner, movie tickets and a few other “emergency” items.

I have to admit it felt great signing my name on the charge receipt. This newfound money was fun to spend. Soon I was off on a full blown spending spree. I applied for another credit card, then another and before I knew it the original $1,500 credit limit was now more than $5,000 spread over five credit cards and it didn’t stop there…

Here are a few things you should consider before and after applying for credit or a credit card:

  • “Student” credit card deals aren’t always your best bet – As a student with a limited credit history you’re considered a “credit risk” so although you may get the card, you’ll probably have a high interest rate.
  • Jobs providing access to money, from fast-food cashiers to accountants to middle-managers typically require credit checks. Know what your credit report says about you
  • Always try to pay $25 to $30 more than the minimum payment required to stay ahead of your credit card bills
  • Be realistic about how much credit you can “afford.” A good measure is no more than 20% of your net income

Getting and using credit without a game plan in place is like sliding down a slippery snow covered slope in winter; the rush of the speed may feel great but you’d better brace yourself for the crash that’s coming when you reach the bottom.

Sanyika Calloway Boyce is the author of four books. She travels nationwide to educate, empower, entertain and enlighten students about money, credit and debt. This former debt-strapped college student shares real and relevant money messages that young adults can relate to and understand. Visit her online today at www.financialfitnesscoach.com.

Consequences of Credit: Part 2

Consequences of Credit: Part 3

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