Bad Credit Score = No Financial Chances

You see it all over the TV and on the internet, your credit score might as well be like the blood running through you. Every bank and credit card company uses it to base their decision on whether or not they are going to take a chance with you financially. Whether that be in the form of a car loan, personal loan, debt consolidation loan, or credit cards. Your credit score is comprised of your financial history and even the current financial things that you have now. It shows your payment history, whether you were on time or late. Not only does it show when you are late, but how many days behind that you are/were with being late.

Without going into credit score information more in depth, you can see why banks would want to use your credit score to figure out whether or not that they want to financially back you up in whatever shape or form that may be in. However, if you are like me, sometimes you can find the system to be quite flawed in regards to several things. 

Do I think credit scores are important? Absolutely, however, I don't think that banks should rely on it as heavily as they do. Why? Because there are so many other factors involved in determining someones financial situation that they should be taking in consideration as well. I'm not sure of the "right" formula to determine this, but I just know there is a better one. 

Take this for instance:

A recent high school student applied for and was approved for their first credit card ever. No co signer or anything. They had limited income (only been working for a few years part time during school) and they are headed off to college. The student will have a full time job but the company doesn't know this yet because they didn't have the job before they applied for the card. However, the credit card company approved them based on a almost non-existent credit score at this point. How nice. 

A few years go by, that student is still working full time, no longer in college but got married young and just moved in with their spouse. She's been using the credit card responsibly the past few years, and was able to get approved for another credit card that she believes will be good to have in emergency situations.  Fast forward another few years, they now have a child together, they moved back to their hometown, and they are in the process of divorcing. This divorce has been especially hard on the woman in the relationship (the original student we talked about) and because of her soon to be ex husband she now has a nasty credit history thinking that they were going to be able to take care of everything together. During the divorce process because some of the credit cards were joint and some were just in her name, she's held responsible for quite a few of them. The soon to be ex husband is difficult to get in contact with as it is, asking for money to pay these outstanding credit cards would be a joke. The house is now abandoned by the ex-husband as well, and the woman knew nothing about him leaving it. Didn't even know the mortgage was behind. So what happens? A foreclosure of course! So not only is she being swallowed up by credit card debt that the ex husband left on her shoulders, but she's also got a foreclosure under her belt as well for the next 7 years. Meaning her credit score is practically ruined. She does the best that she can financially to pay the bills and yet take care of her daughter without the help of any child support. 

A few years later she gets close to getting out of debt but because of how life happens, things come up, emergencies happen, and she's drowning in debt again. She's trying so hard to pull out of debt to better the life for her and her daughter, that she can't even see the light at the end of the tunnel. She's running into roadblocks everywhere she turns. Not approved for a debt consolidation loan, not approved for that 0% APR balance transfer, etc. All because of what? Her credit score and financial history, that if she could rewrite it, she would do it all differently. However, that not being an option, she pushes through taking every hard earned penny she makes and puts it towards her debt. 

How are we to use those 0% APR balance transfers to help us out and save on interest when we can't even get approved for them? How are we able to use debt consolation loans if we can't even get approved to use them? We can't lower our payments for the 7 credit cards we now own, nor are we able to get them grouped together to just pay one monthly payment rather than 7 different ones and forgetting (because so many other things are going on in the world) about 1 or 2 every once in awhile.

What all this boils down to is this: banks/credit card companies don't take in consideration the emotional side of things, the logical side of things, or why certain things happened, they are only worried about how you look on paper. They aren't worried about getting you out of debt, and they are perfectly fine with you getting in more debt because it's more money in their pocket. So unless you have a suburb credit score, don't even bother wasting your time trying to get loans or lower interest balance transfer cards.