3 Things I've Learned as a Millennial With Bad Credit

January of 2010 found me at one of the lowest points of my life. After having spent most of 2009 battling a mystery illness that left me unable to work, I was forced to file bankruptcy. I watched as six years of perfect credit went down the drain, and tried to face the reality of filing bankruptcy at such a young age. There wasn’t much debt to wipe out — only a couple of credit cards — but it was enough that I couldn’t simply wish it away.

As I sobbed to my mother that my life was ruined, she patted me on the back and assured me that things would get better in time. While she certainly wasn’t wrong, there were consequences to my bankruptcy (and subsequent bad credit) that I never saw coming.

Bad Credit Affects Far More Than You’d Ever Imagine

I hadn’t expected my car buying experience to be golden, but I also hadn’t expected the salesman to apologetically tell me that if I wanted an affordable car payment (on a used car), they wouldn’t be able to put my name on the title. I was crushed.

I had hoped that a regular car payment would be the first step in rebuilding my shattered credit. Instead, my parents’ names went on the title and I was presented with a payment I could actually make. While I’m eternally grateful to my parents for their support, it stings a bit that the credit building payments I’ve been making for the last six years have been going to their report instead of mine.

Purchasing a car is just one situation where having bad credit has the potential to ruin your day. The following are all circumstances that can be negatively affected as well.

• Your ability to:
  • Obtain a bank loan
  • Get approved for a credit card
  • Land a job
  • Rent an apartment
• The rates you’re eligible for on
  • a mortgage/refinance
  • student loans
  • car insurance

Since filing for bankruptcy, I’ve been turned down for three credit cards, had the incident with the car purchase, and been unable to even apply for a number of apartments I wanted to rent. This is doubly frustrating, since...

No One Cares Why Your Credit Is Bad

I made payments on my credit cards clear up to the day I filed bankruptcy. There was never a late or missed payment, I always payed above the minimum — hell, I even bought and paid off a car in two years. My credit was perfect. However, that meant absolutely nothing to the people and companies who checked my credit over the years. Once they saw the big glaring mark of bankruptcy, they were out — as were my chances of achieving whatever particular dream I was entertaining that day.

Of course, being turned down again and again for any scrap of credit means that...

Rebuilding Credit Is Hard

I’m currently living with my father, so there are no rent or utilities in my name. My mobile phone provider doesn’t report to the credit agencies, and, as I mentioned before, my car isn’t in my name. That means that the regular payments I’m making every month don’t impact my credit whatsoever. And since no one will give me a traditional credit card, I can’t even count on that as a way to rebuild my credit.

However, there are a few tools that still remain at my disposal.

• A Secured Credit Card: A secured credit card works like any other credit card — with the exception that money is deposited upfront as collateral. The money deposited usually equals the amount of the credit limit. For instance, a card with a $500 limit will require a $500 deposit.

• A Credit-Builder Loan: Credit-builder loans are often offered by credit unions or community banks as a way to rebuild your credit (hence the name). The money borrowed is deposited in a savings account, and cannot be accessed until the borrower has fully repaid the loan. Once the loan is repaid, it’s reported to the credit bureaus.

• Becoming an Authorized User: Being added as an authorized user on another person’s credit card can help your score by increasing the overall age of your credit accounts. However, if the account holder doesn’t pay their bill on time, it can also hurt your score, so it’s best to ask someone with good credit habits. You do not have to be issued or use a card to be an authorized user on an account.

My mother has been kind enough to add me as an authorized user to her credit cards, and I plan to apply for a credit builder loan at the start of 2017 — just after my bankruptcy drops off my credit reports. Once I’ve paid off the loan, I’ll be using the money to make a deposit on a secured credit card.

There’s not a day that goes by where I’m not aware of how unbelievably lucky I am. I have a decent paying job, a roof over my head, and food to eat. I also have two wonderful parents who’ve been nothing but supportive during my financial journey. While filing bankruptcy was one of the hardest things I’ve ever had to do, it also taught me a lot about personal finance, and opened my eyes to the world of credit reporting. And that’s a valuable lesson.

About the Author: Liz Greene is a makeup loving, dog hugging, anxiety-ridden realist from the gorgeous City of Trees, Boise, Idaho. You can follow her on Twitter @LizVGreene or catch her latest misadventures on her blog, Instant Lo.