I have a friend, we will call him Todd. He has lived with just the cash out of the pocket mode for 20+ years. He got divorced over 20 years ago and his wife had taken care of paying the bills when they were married. While the kids were young he said he continued giving his paycheck to his ex-wife and she gave him some money to live on.
After a job loss and he started selling his services as a handyman for cash. He has paid no taxes for at least ten years but he has made enough to scrape by.
He kept his truck insured but he never borrowed money or got a credit card. He lived with the cash in his pocket and only worked for cash.
His credit score was 542 when we first checked with Credit Karma. He did not have any positives and only one old negative from Verizon.
He had one negative from Verizon that was a several years old. He had not paid off his last contract with Verizon. We went to Verizon and asked if they could delete the old negative. They said yes. He applied for a new account and they opened him up. He gave them $100 and they gave him a phone and number.
We left happy and he had a new phone and Verizon account.
Verizon deleted his negative and it was removed in less than two weeks and we were on our way building a new Credit History for Todd.
I added Todd as an “Authorized User” to my twelve year old Chase credit card.
This card had a $5,000 credit limit and has no missed payments. If there had been a missed payment before seven years it would have been removed.
Within a month his score jumped to over 750.
He tried to get a Lowes credit card with his new 750 credit score and they denied him a new credit card. Even with this new score, they understood that he was an authorized user on a card and he showed no credit experience. Building new credit takes time. If he had stuck with the credit we had gotten him and paid on time he probably would have been able to get a Lowes Card in about six months.
In another month with his new 750 credit rating, he got a Capitol One Credit Card with a $2500 limit. My Chase Credit card with the $5,000 limit showed on his report also. He did not get access to the Chase card and he did not know the card number.
He went back to Verizon and bought two $1200 phones (one for his lady friend) and a $500 tablet. He returned the $400 phone he picked up when I was there with him. He also got insurance on the phones and tablet through Verizon.
Two weeks later the phones and tablet were stolen out of his vehicle. He said it was his girlfriend's other boyfriend that broke his window and stole them out of his van. He did not have the deductible to pay the insurance for his phones and tablet. He needed $300 to pay the insurance company. He also needed the $180 per month to keep his service as his monthly payment was due. His service had to be active to get replacement phones from Verizon insurance. He could not come up with the $480.
He went to ATT and got two new $1200 phones and a tablet from them with his 750 credit rating. I asked him why he went to ATT and he said he got the phones with no down payment and no payments for 30 days. He also needed to talk to his girlfriend as she was in Rehab without a phone.
He maxed out the $2500 on his Capital One card. He did not pay on the Capital One card and they went into collections. His Verizon account went to collections. He quit paying on the ATT phones two or three months later and they went to collections.
He now has a Straight Talk phone and a 540 credit score and the girlfriend left him.
After our trip to Verizon where he first got the account opened and his first phone I did not see him for a couple of months. It took us about a month to get his credit score up to 750. I was ecstatic. Within three months after building his new Credit he had screwed over Capital One, Verizon and in a couple more months ATT.
As crazy as all of this sounds, this is all true. I explained how important it was for him to make his payments on time. I thought I had gotten him started on the path to a great Credit history. I guess the old saying "You Can't Handle Success" is really true for some people.