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The Unaware Consumer

There you were, eighteen years old.  A flood of letters start to arrive with your name on them.  They tell you how you are approved for their credit card for a predetermined limit.  You have seen these cards used everywhere, it seems everyone has one.  Why not you?  So you apply for the card and you get it!  Oh the joy!  Now you can purchase things with someone else’s money!  You don’t have a great job while attending college, just something to help pay the bills (extra food and gas/insurance on the car).  So you continue to use the card.  You might make a late payment once in a while, but you don’t have the card maxed out so you think you are doing a good job. 

It’s time to trade it that car that your parents helped you get.  You can afford to make payments on something nicer.  You drive off the lot in a new used vehicle, proud that you talked the salesman down $4,000 dollars from their asking price.  What does it matter that you are paying 16.9% interest.  They put you in a car that you could afford!   

You have been out of college around 4 years, have a job making a good salary.  The fiancé finds a home she adores and you apply for a mortgage on that home.  The loan officer returns to you and starts explaining apologetically.  How can this be?  You have 3 credit cards, an auto loan, and you can easily afford this home as your income is high enough. 

The loan officer explains that your credit scores are not high enough for you to qualify for the available loans.  You had several late payments, 1 of your credit cards are considered maxed out and there are several collections on your report.   Oh those medical bills that you couldn’t afford to pay during college.  A couple of those you did pay last year, but they are still showing on the report, but with a $0 balance! 

The intelligent loan officer understands your situation and has a solution for you.   He hands over a business card.  Credit Repair?  He tells you that the option is to get your credit scores up high enough to qualify for the mortgage loan, or to keep renting and paying someone else.  Oh, and that car loan could be refinanced and save $100-$200+ per month with those better credit scores.