Friday, October 20th, 2017

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Consequences of Credit: Part 2

As I mentioned in Part 1 of the series, it wasn’t my intention to allow my credit cards to get so out of control. But when it happened the consequences were far more damaging that just bad credit. Everyone makes mistakes and most people learn from them. The painful part of making a big mistake is often not in the original sin but the ripple effect that comes along with it.

For instance, you know that drinking and driving is not only a big mistake but very dangerous as well. But one night, after having a little too much to drink, you convince yourself that you can still drive. You get pulled over and if that’s not bad enough; you’re summoned to appear in court where you get a hefty fine, your license is suspended and your car insurance rates go through the roof! Long after the alcohol wears off you’re still buzzing from the after shock.

So, imagine my surprise and remorse when, after earning all of my college credits a full semester early, getting good enough grades to put me in honor society, completing several internships AND attending networking events, all of the things I was "supposed" to do to set myself up for post-college success, I still couldn’t get a job!

For me, college was my ticket to a better life. Growing up I was told to get good grades and focus on education and I’d be successful. From my perspective, this was good advice because successful people were well-educated, well-spoken and well-dressed.

The problem was that I tried to "look the part" while working toward being successful. In the end, all that potential employers saw was a financially irresponsible applicant; not a smart college grad. Now it would have been easy to cry discrimination; after all, I am an African-American woman who attended a historically-black university. But race, age or lack of qualification had nothing to do with it. I simply didn’t know what I didn’t know and my financial ignorance cost me big time.

Coupled with feeling crushed after receiving several employment rejection letters, my problems with the credit card companies continued to balloon. The pressure of feeling as if I had failed and my mountain of debt caused me a lot of sleepless nights.

Finally, after realizing my dream of moving to New York was quickly turning into a nightmare, I got a full-time job in retail to pay the bills and a part-time job to pay my credit cards. Bad credit isn’t just the opposite of good credit; its negative effects reach into the three most important areas of your financial life.

Job Opportunities. Statistics vary on the number of employers who pull credit reports or that do some sort of personal profile check on potential employees, but according to Davis Bushnell, a Globe correspondent, "Twenty years ago, credit checks were conducted mostly for people wanting a job at a bank or credit union. But now, as a result of the recent rash of corporate scandals, employers in industries from banking to retail are increasingly using credit reports to screen applicants for temporary and full-time jobs." And a Federal Trade Commission consumer alert warns, "Employers often use a credit report when they hire and evaluate employees for promotion, reassignment or retention."

Housing. Landlords and mortgage lenders look unfavorably on late payment, no payments and defaults. After all, if you can’t keep up with paying your cell phone or credit card bills on time, what’s the likelihood of you paying a much bigger rent payment on time? The old adage, "If you haven’t been faithful with little, who will entrust you with much?" rings true with landlords!

Future Savings. My $15,000 in unsecured debt skyrocketed to more than $23,000 over the 7½ years it took me to repay it after college. That was more than $8,000 that I couldn’t invest in my 401k, personal savings, or, heck, just keep in my pocket! The thing that really stunk was sending in checks for cards that were already closed and purchases that were long forgotten.

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.


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