Credit
The Worst Credit Score I Have Ever Seen
I’m in the market for a new set of tenants these days. On Thursday I had the pleasure of meeting two young ladies and their entire family as they came to look at what will be their first apartment. I sent both girls a link to an electronic background and credit check service that I am now using on all tenants since the last one decided to become a drug dealer.
Once they agreed to the terms and paid the application fee, I was given access to their criminal history and credit check. While I learned that they were not on the terror watch list, I also learned that they are young, cute, sweet, and broke. In fact, one of them has the worst credit score that I have ever seen in my life. I knew that a score under 500 was possible, but I had just never actually seen a score beginning with a 4, especially since it’s attached to a 21 year old. Let’s refer to her as Ms. Holy-Crap-That’s-A-Horrible-Score.
Going through Holy Crap’s credit report, I realized that there was a major pattern that led to her horrific credit score. She, like many young people, liked spending money, but she didn’t like paying her bills. What bills can a 21 year old possibly have, you ask? You get two guesses. If you guessed student loans, you have that right. If you guessed store credit cards, you were also correct.
I find store credit cards to be a dangerous tool in the hands of someone barely old enough to go to Las Vegas. It’s easy to toss this season’s must have clothes on a store credit card, but it’s hard to pay the bill, especially since most of those cards come with a 29.99% interest rate. Resist store credit cards, even if they offer you 20% off your first purchase.
Back to the student loans. Ms. Holy Crap had a number of student loans, but I don’t believe that she finished school. Her school loans had entered repayment some time ago and instead of sending in the $50 payment or asking for a deferral, Ms. Holy-Crap-That’s-A-Horrible-Score decided to ignore the good folks at her local student loan office….for months…and months…and months. She was more than 120 days past due on a number of student loans. The student loan people can be lethal when you don’t pay them or when you ignore them. Remember, you never get to charge off student loans. That debt will follow you to the grave, reach in, and pull the ring off your finger to make sure that they get paid. Okay, maybe not that extreme, but I wouldn’t put it past them.
But wait, there was more! Ms. Holy-Crap-That’s-A-Horrible-Score has FIVE accounts currently in collections. They’re not for a lot of money either. The total debt in collections is a bit over $3,000. It’s a decent amount, but she probably will not have to pay that much if she calls each creditor to negotiate a payoff amount.
You thought that I was finished, didn’t you? Nope! There’s one more area here Ms. Holy Crap has been shooting herself in the foot. She keeps applying for more credit all over the place. In the past year she has had 15 hard pulls (meaning that she applied for credit). These inquiries typically drop off a credit report after three years. Too many inquiries can have a negative impact on your score. In her case, she already had a bad score and kept making it worse by applying for credit over and over again.
So what can we learn from this? This should be easy. DO NOT DO ANYTHING LISTED ABOVE UNLESS YOU WANT TO SEE HOW LOW YOUR CREDIT SCORE CAN GO. In my case, I’m actually willing to give her a shot as a tenant. She has a steady job and is supposedly learning for her past mistakes since I couldn’t resist pointing them out to her.
Plus, her foster mom secretly agreed to cosign the lease after I gave Ms. Holy Crap a copy of her credit report. I’m not a sucker.
