Chelleology

Starting college is an exciting time for many 18-year-olds.  It’s a time when young adults learn about themselves, learn how to live with others and they develop their own opinions of the world around them.  It’s also a time when they learn the dangers of too much alcohol. 

But one thing that never seems to get talked about during this time is the importance of good credit.  College kids are easy prey for credit card companies. They show up in the student union and give students t-shirts, koozies and keychains if they apply for a credit card.

Possessing a credit card gives these kids a whole new sense of independence.  It didn’t matter if these kids could pay off the card.  Most of them only work part time and in a society where everyone must have the latest gadget, it’s likely they will find themselves in a situation they are not able to buy their way out.

Maxing out credit cards, many of them with high interest rates, late payments and having too many credit cards will have a negative affect on their credit score.  Often times, these young adults don’t realize how a poor credit score can make life more difficult until they are faced with needing to buy a car, get a good insurance rate and up until recently, their ability to buy a home.

The Biden administration has decided that people with bad credit should be rewarded with better rates and pay less in fees when they purchase a home.  Meanwhile, millions of people who have better credit scores through hard work and self-control are now being told we won’t get the benefits of good rates and less fees.

First, as someone who once worked in the Foreclosure Department, I know how damaging this policy will be.  When a homeowner defaults on their mortgage, the cost to foreclose, evict and remarket the home to recoup cost is astounding.  They must pay people to call delinquent homeowners for months, in some cases more than a year, to try and compel them to pay their mortgage.  Then there’s the cost of evicting and change the locks.  The cost doesn’t end there.  Banks must pay to repair damages to homes (if they’re about to get evicted, homeowners will often give up on maintenance or purposely damage the home), then there are the grass cuts, winterizations, trash outs and boarding.  My favorite task was dealing with the city of Chicago who would threaten us on a weekly basis with demolishing a home that due to rampant crime keeps getting broken into.  That is sarcasm by the way.  Ask me how much it cost my company had to pay the attorney to get Chicago off our backs.  I bet you would be surprised.

Second, a foreclosure causes a decline in property values.  When companies appraise a home, there are many factors that play a part in how a home is valued.  Things like proximity to shopping and dining, whether the home is in a good school district and the number of foreclosures in an area affect home values.  Bad credit doesn’t just live in poor communities, it lives in every community so, yes, the number of foreclosures in your area can and will affect your home value.

Finally, you are not doing any favors to those with poor credit scores.  This rule only affects home loans.  It does not carry over to car loans or credit cards.  While credit card companies will give a credit card to anyone over 18 with a pulse, bad credit will disqualify someone from getting an affordable car loan.  While it could be argued that someone could live without a credit card, many of us cannot live without a vehicle unless you live in a city where public transportation is plentiful.  Going through a foreclosure can annihilate your credit score and CAN disqualify you from getting a car loan.

We are setting a dangerous precedent.  If we continue down this road, we could leave a legacy of debt that our children will have to pay off.  Of course, with the way our representatives spend money, what is a credit score anyway?  Maybe it’s now just a bragging right.