My family has been through a lot in my lifetime. I spent all 18 years of my childhood in an impoverished household. My mother raised my two sisters and me by herself. She tried her hardest, even after her health deteriorated and she became disabled, but we still felt the effects of poverty.
I grew up with a chip on my shoulder. I was determined to make it out of the cycle of poverty that seemed destined for me, and I knew that building a strong credit profile was an integral part of that process. So I began building credit the day I turned 18. It was one of the proudest days of my life.
Everything was going great for me. I had a line of good jobs; I was a full-time student; and I carefully monitored my credit profile to make sure my balances stayed under 30 percent utilization.
But then, while on summer break from college, I moved back home with my mom and sisters. That’s when things started to go financially downhill.
During the school year, I had been very fortunate to live on campus, where I always had a nice place to stay and a hot meal whenever I wanted.
When I came home, I felt guilty about the difference in living standards between myself and my family.
Out of this guilt, I began using my credit cards to buy things for the house that my family had needed for a long time. Things like clothes, shoes, pots, and pans — occasionally, I even paid for groceries and utilities. These were things that many other people would have taken for granted, but thanks to the effects of poverty, they weren’t affordable on my mom’s monthly disability check.
This spending was fine in my eyes. True, I was running my balances near 50 percent utilization, and it reflected in my credit score. But I still had a way to pay my credit card bills. I had a steady, good-paying job and I wasn’t missing any payments. Everything would return to normal once I went back to school and didn’t have the extra expense of supporting my family.
The Effects of Poverty
Then, life threw me the first of several curveballs that started a downward spiral for my credit: I failed the math class I had been retaking during the summer.
I was about to start my sophomore year of college. This meant that I was nearly done with my general education requirements. It was time to begin courses relevant to my major. But without that math class, I was unable to register for any of the classes necessary for my degree. With no backup plan, I ended up dropping out.
My Struggle to Find a Job
When my summer job ended in August, things went slowly downhill. Recently unemployed, I’d begun applying and interviewing for positions that I thought I could easily get with my résumé and references. But nobody would hire me — not even Wendy’s or a Greyhound bus station.
I tried everywhere, but nobody wanted to hire a 20-year-old college dropout.
The bills began coming. For a short while, I was able to keep up by using what little I had in savings, working odd jobs, and selling things I didn’t need. I made at least the minimum payments on my credit cards pretty easily until winter rolled around. Then bills soared, and so did my balances on my cards.
Then, life threw another curveball: my family was evicted from our home. Without a backup plan, savings, or any sort of safety net, we became homeless. I was lucky enough that my federal tax refund (which I’d planned on using to pay down my credit card balances) had arrived a few days before we were officially evicted.
My family lived out of our car and hotel rooms for six weeks until my mom finally found a place with the help of some counselors and resources in our area. We moved in the first week of April that year.
If my credit wasn’t destroyed before, it sure was after that.
Between the time we were evicted and the time we moved into our new home, I maxed out every card I owned. That two-month period sealed my credit’s fate for the next few years, at least. A few months later, all of my credit card accounts except one had been closed and either charged off or sent to collections.
I was a defeated man.
Protecting Your Credit During Periods of Unemployment
When experiencing a major life change, such as eviction, loss of employment, or dropping out of school, the last thing you want to worry about is your credit score. But even during periods of financial difficulty, there are ways to keep your score up and combat the effects of poverty.
1. Make a List of Debt Payments
During periods of financial hardship, as debts begin to pile up, organizing your upcoming bills can help you address the most pressing financial issues and avoid credit-damaging late payments.
“At the first of each month, write down all the bills that are due and their respective due date,” says attorney and debt advocate M. Reese Everson. “Being late once will ding your credit something terrible, and those dings add up.”
2. Take Advantage of Local Resources
“Reach out to your state department of human services for a list of community resources that might help you through,” says Todd Christensen of financial counseling website MoneyFit.
“It is the rare household that has never or will never be in a position of benefiting from help from family members, community organizations, or the government.”
3. Find Cheap (or Free) Credit Counseling
“See a nonprofit credit counseling agency that belongs to one of the two main industry trade groups — either the Financial Counseling Association of America or the National Foundation for Credit Counseling,” Christensen adds. “They should offer you free counseling and educational information to help you through your crisis.”
Rebuilding My Credit — and My Life
I was lucky enough to have had a group of friends and mentors who pushed me in the right direction. In fact, I returned to school at Northern Kentucky University that same August. Since then, I’ve dedicated my time to educating people on how to establish, build, and maintain their credit, as well as how to manage their personal finances.
I’ve just recently begun getting my life back on track. I spent my first few months back at school recovering financially — getting my financial base re-established so that I would have a place to rebuild. I’ve only recently reopened my savings account and begun the process of credit repair by reaching out to creditors and collectors.
It’s been a long journey, and it’s going to take a lot of time and determination to get my credit back on track. Personal finance skills will be paramount in me doing that, and I’ll definitely be harnessing CentSai to make my journey a bit easier.
Additional reporting by Connor Beckett McInerney.