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I want to put everyone on high alert to ensure they never underestimate the damage late payment of bills can cause. Young people in particular who have a "who cares" attitude to their financial responsibilities are an endangered species. Do not take offence at what I am telling you, I am very much on your side.
Every one of us has had times when you cannot meet an account by due payment date. My advice, if heeded, will have a dramatic effect on future dealings, in fact, for the rest of your life. There's a way to head off black marks on your credit rating file. These black marks are akin to cancer in the health area, they are deadly when it comes to future borrowings. I have highlighted the problem, now for the answer.
I want you to avoid a bad credit rating like the plaque. You know when your payments are due, and when you realise your inability to make this payment, pick up the phone. You will usually be surprised that if your story appears reasonably genuine, you will get more time to pay. Now when this day arrives, meet it or else. Or else means you have probably had your name referred to a credit rating agency, by far the worst day of your life.
It is all about communication, a good early life lesson that, when learnt, will stand you in good stead forever. In other words, be upfront and honest, it pays huge dividends. Remember it is no disgrace to be short of cash when a bill becomes due, but ignoring it is thwart with danger that you could avoid. Because of the tough times we are experiencing, the shopkeepers are doing it hard, their fuse string is burning faster than normal. Your non payment on time has put them in a hot spot to meet their commitments, you have made them angry. But, if you had been in touch with the reasons and remedy for your late payment, then he can tell his creditor that relief is expected by whatever your arrangements were.
Most young people live for today and can become lax in keeping within due date deadlines. Just fast track a few more years, you and your soon-to-be bride or live-in approach your bankers to buy say a house. Your wages are tops, hers are very nice thank you, you are looking good. The application process is a pain in the butt, but must be done. Everyone is getting excited; you are going to be told in a few days how you fared. Bingo, all is well, except you have a black mark for a bill you ignored after several reminders, and guess what, you were dobbed in. Declined, now try to rub that black mark off your records. It isn't easy; in fact you are doomed for years.
I'm rescued, you say, there's an advertisement in the local paper to say you don't need a perfect credit rating to get a loan from us. True too, but be warned. These good Samaritans do not come cheaply, you get nothing for nothing in today's world, and rightly so. They are taking more risk lending to a defaulter, so they naturally charge more, like a bull. It is bad business to get in bed with these crews.
Okay, I am snookered, where to now? The sad truth is that you have to get on the straight and narrow from this day on. There are a few choices as the way to go, and I will tell you the number one. You and yours make regular deposits into a bank account, and do not miss a beat. After two years of regular savings, a further approach for a loan will have considerable more chance of gaining approval. They will check your credit records, and if there's no deterioration since last time, your banker may smile upon you.
You're earlier in life financial choices have set you back two years, but if you have matured in the responsibility stakes you are a better person for the experience. Okay, this advice has cost you nothing, but with it comes a later in life commitment that I want you to honour. When your children leave school, make sure you tell them your story, its maddening effect it had on you, and how you overcame the problem. You will be doing your child a great favour, you are now cleansed.
Another tip before you become totally bored. Always remember, your banker is your best friend, or worst enemy, depending on how you treat him or her. A friend in need is a friend indeed. Better come totally clean before I sign off, I was a bank manager for many years. Take heed of this article, you can then call me a friend too.
Good luck with your loan application. Finally, always keep your credit rating as clean as your motor vehicle. It pays big dividends.
Bill Adams, author.
