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Posts tagged with: bad credit

How I Use My Credit Card


There have been lots of questions and confusion in the comments of my latest budget post regarding my credit card. Rather than responding to all the individual queries, I thought I would clear it up here.

Credit Card Details

My line of credit on my only credit card is $5,000. This past fall, I was able to pay down the rolling balance from continually maxed out at $5,000 to $3,700. And I’ve kept the maximum balance at that $3,700 range for the past few months.

How I Use It

I use the credit card as a rolling line of credit. Meaning, I use it but pay it off immediately. And I use it a lot every month. I pay a number of my monthly bills with it as well as use it for gas and groceries.

This is why I don’t have a minimum payment for the credit card in my budget. I pay the minimum in my usage and payment strategy. But have been good at no longer growing the debt this fall.

My Reasoning

I realize that this is not the recommended use for a credit credit. But I do this for two reasons:

  1. One it gives me added protection from having my bank account cleared out again. (This has happened at least twice in the last 4 years.) I am very careful about using my debit card or anything that has direct access to my cash.
  2. It also allows me to keep paying on this debt and not growing it any further.

I hope this clears up the questions about my credit card, why I didn’t budget a minimum payment for it and how I use it. If there is anything I missed, please ask in the comments and I will do my best to answer.

I do know that I am not willing to close this last credit card account, even when I do get it to $0. But I will definitely always have the cash to pay it off. I just feel safer using it when traveling and for the added security with larger purchases, car rentals and more.

Editors note: One way you might consider improving your credit score is something called tradelines.  When you get a tradeline you’re basically paying a fee to be added to someone else’s credit.  Buying tradelines isn’t for everyone.  It costs money and unless you want to spend thousands of dollars a month, its only going to be a partial solution.   So you’ll want to be sure your bills are paid on time and your credit card utilization is low.

How the Payment Box Allowed Me to Buy a Car


By Darren Stevens

I thought my story might help some people who find themselves in a similar situation. I was recently able to get a car because of the payment box when I likely wouldn’t have been able to any other way. Getting that car was vitally important because it allowed me to keep my job, which in turn allows me to pay for my apartment and stay off the streets. It’s a rather long and complicated story, but I will give you the concise version to give you a bit of background.

I’ve been in and out of the hospital for some years now due to chronic illness. The illness has also led to me having huge medical bills and even filing for bankruptcy. Due to all of this, my credit isn’t what could be called close to being good. It’s terrible, and that makes it difficult for me to qualify for any credit or loan. That hasn’t been a problem because I went to an all-cash system that had been working well. That was until my employer decided to move locations which meant that I would no longer be able to take public transportation to work.

The only option I had was to get a car or lose my job. I was terrified because I thought there was no way I could qualify with my credit history. Then I remembered an article Tricia wrote about payment boxes when they first came out years ago. Since my choice was to have a job and a roof over my head or not, I immediately went searching to see if I could find something that could help me get a reliable used car that would get me to and from work each day.

For those not familiar, a payment box is a device that lenders place in the car that give them control of whether or not the car starts. , it allows lenders to disable your car so that it won’t run if you don’t make a payment that’s due. While this sounds like a terrible thing for the car owner, for me it was a lifesaver. That’s because the payment box gives the lender some control over getting payments, so they’re willing to give people like me who have terrible credit a loan when otherwise it wouldn’t be worth the risk.

By having control of the car, it mitigates their risk and allows them to easily disable the car. It won’t start if a payment is missed, and to recover the car (the device also has a GPS tracking system) if a missed payment isn’t immediately made. On my side, as long as I make the monthly payments on time, there is no issue, and I have a car that gets me to and from work. With these safeguards, they’re willing to make a loan to someone they might not normally approve. To qualify, I had to show my paycheck stubs to prove that I could make payments.

There are a lot of people who think that payment boxes are a bad idea. I read a survey conducted by Stoneacre that said the public is still evenly divided on whether or not this is a good idea. It said that 35 percent of people thought the payment box is a good idea, 34 percent thought it’s an invasion of privacy, and 31 percent had no specific view on it. My guess is that those who though it was a bad idea or an invasion of privacy have never been in a position where they couldn’t get a car they needed without this option.

I must admit that I would prefer not to have the box in my car. They claim they only use the GPS capabilities if they need to repossess the car, but that doesn’t mean the NSA doesn’t have access to it. I’d rather there not be a possibility of someone knowing where I am at any time. If, however, the choice is that or living on the streets because I can’t get to my job, I’ll gladly accept the conditions.

So you may be wondering why I’m writing this for BAD. I wanted people to know that not all people who have terrible credit are people who just racked up credit card debt and decided not to pay, or people who don’t understand how credit works. Not everyone who gets a bad credit car loan is someone who is lazy and didn’t have what it takes to organize their finances. Until I came down with my illness, I had great credit, and I’d never failed to pay a bill on time. When you get sick, and your choice is getting the medication you need to stay alive or paying a bill that has come due, priorities change pretty fast.

There are some of us who were thrust into the poor credit world because of the genes our parents gave us without ever intending to get anywhere near it. I hear from a lot of people who say that those with bad credit shouldn’t be able to get any credit because they have already shown they aren’t reliable, and they should live with the consequences of their prior choices. The truth is that there isn’t a one-size fits all designation as to why people have credit problems. And if the system didn’t find ways to try to help those who do have bad credit, I would probably be living under a bridge somewhere instead of having a job, paying taxes and being able to contribute to my community.