The post-Christmas hangover is in full swing.
Sometime during the next 30 days, when those credit card bills hit the mailbox, many of us will utter, “I spent how much,” or something similar and far less family friendly.
It’s for that reason that now’s a good time to talk about credit scores and, in particular, why it’s a good idea to have the best score possible. There are professionals, both found locally and online, as well as countless resources available detailing why a good credit score is important, and if yours isn’t a good score, how you can get it there.
But that’s for tomorrow’s story. This is, after all, a two-parter. Of all the new year’s resolutions one can make, working on your credit is an admirable goal.
Generally, a credit score runs from 350 into the 800s and is used as a predictor of the likelihood a person will pay back the money that one borrows from a lender, whether that be a bank offering a car loan or mortgage or even a department store with their brand of charge card for in-house goods and services.
The higher the credit score, the more willing they are to part with their money.
I should know. I do NOT have a good credit score. It’s not the worst by any stretch, but it’s certainly not the best. I got to learn a painful lesson both mentally and in the ole wallet this week about why a bad credit score is a royal pain
I shall regale you with my cautionary tale from the last few days in hopes of convincing others similarly situated that it’s time to get off thy keister and start improving that score; well, that and a wee bit of catharsis for yours truly.
I’ll set the scene. My credit score runs somewhere just at or near 600. I’ve recently crept of the credit pit of “poor” and reached the “fair” stage. Go me. But let’s be honest; anything below 620 is in serious need of work; 680 is the goal for now
Anyway, what started this ball rolling was my car, a 2017 model which was encroaching on 103,000 miles. Between driving back and forth for school and practices for my daughter, travel for various news assignments for my two writing jobs, and the occasional date night, I put a lot of miles on my car.
Keep in mind the miles—nearly 103k. My powertrain warranty on my vehicle ran out at 100,000 miles even. My extended warranty I purchased because I knew I put a lot of miles on the car and the regular warranty expired at 60,000? Yeah, that capped 102,000 miles.
I had appointments set up the next few weeks to get four new tires, an alignment, and rear brakes. I just had the windshield repaired, and I was feeling pretty good about my car’s condition.
Then, the check engine light flashed briefly, as it loves to do at the most inopportune times. Shortly after, I noticed an ominous clicking sound coming from under the hood whenever the engine was running.
I didn’t take it to the auto shop, but I knew this was not a good sign. Despite still owing two years left of a six-year auto loan, I decided it was time to roll that into a new loan, upgrade and get a new vehicle.
Option One
A friend from my younger days and old neighborhood works at a local dealership, so I wanted to check with him first to see what they had and what kind of deal was available.
So I drove down that night to see what they had, and I found a 2022 model, affordable MSRP (as a starting point). and it came in my favorite color.
I was going over potential payments rates and how high I was willing to go while he and one of the dealer’s mechanics gave my car the once-over.
When they came back, it wasn’t good news. The engine was literally on its last leg and was going to die. Because of this I was unable to trade in that vehicle and roll my remaining balance into a new loan. They tried to get me approved without a trade-in.
Surprisingly, one bank was willing to deal, as my credit score, coupled with having what would be two loans at once, scared most banks off. But my APR? Twenty-three percent. That made the payments a lot more than I wanted to pay, plus I still had to pay two more years on a car that was likely to die in days.
Safe to say, the drive home and following mulling over my options the next few hours were not ideal. Before I left the dealer, I renewed my AAA membership just in case. I may have been screwed at present, but I wasn’t going to be stranded either.
Option Two
The following day I returned to the dealer where I purchased my current car, as well as two prior to that. I was upfront about the engine issue with my sales rep, but I was hoping that if anyone could make something happen, it would be this dealer.
They did, but again, the interest rate was high (not as high), but they wanted an amount of a down payment that I couldn’t afford. Again, this was all made possible by my lovely credit score.
As an aside, I take full blame and responsibility for my credit score. This isn’t a whining, woe is me lament; rather, it’s a real-world example of why you need to keep that credit score up.
l really couldn’t afford going back to the first dealer for the lower payment, but still have to cover the original loan on a car that wasn’t going to run.
And safe to say, I can’t afford to replace an engine. But did I pay off the car anyway each month while it sat there, not being used? Or did I swallow the impending credit hit and let it get repossessed.
Seeing as I would like to build a house again here in the next few years, that’s a credit hit I wasn’t willing to take.
Fortunately, my go-to dealer was able to work some numbers, as they say, and get me into a much better price point per month.
It’s still more than I wanted to pay, but this was a manageable amount and one that didn’t have me on the hook for two loans at once.
There was a lot of sweating and nervous moments. Fortunately, my main job is working remotely presently. But the other two require travel, plus I’m not the only person in my home relying upon my vehicle to get to and fro.
I know how lucky I am given my circumstances, and I thank both dealers for finding a way to help out, despite my credit score.
Climbing out of the credit hole is not an easy task. I did it once before, reaching 660 before falling back down because of a litany of reasons that all boiled down to excuses. No need to list them here. They were able to be overcome. I just didn’t at the time.
That’s not going to be the case this time. My credit score will keep rising, and tomorrow, we’ll offer some tips from an expert that you can take along with me and we can walk this journey together. Or drive, drive this journey. I came close enough to walking this week.
Generally, a credit score runs from 350 into the 800s and is used as a predictor of the likelihood a person will pay back the money that one borrows from a lender, whether that be a bank offering a car loan or mortgage, or even a department store with their brand of charge card for in-house goods and services.
