Imagine what life would be like if you were frozen a generation ago and were suddenly thrust into today’s world. Could you survive?
Here’s this week’s question:
I’m a 52-year-old released from prison six months ago. I have a checking account, but no credit to speak of. I have medical problems but no insurance, have a job but barely make ends meet, and have a wife who can’t live with me because I have no home of my own. But I’m a person who flat refuses to give up when the deck is stacked against me. How does someone start their life over after 21 years in prison?
The short answer to your question, Bearl, is that you start over the same way people have for eons: by putting one foot in front of the other.
The first thing to understand is that you’re not alone, or even rare. Not to downplay your hardship: You’ve got a tough row to hoe. But the world is full of people forced to try again. People who get divorced. People who go bankrupt. People who lose everything to fire, flood, earthquakes or war. People who lose the love of their life. It’s happening all over the world every day.
The beautiful thing about adversity is that you’re the one who decides whether to lie down and give up or to treat your difficulties as challenges in the epic adventure of your life.
Let’s go through your issues one by one.
What to do when you have no credit
Here are some ideas to build a credit history from scratch as quickly as possible.
- Idea one: Talk to the bank you’re currently doing business with, preferably in person, and explain you’d like a low-limit credit card to establish your credit. If you don’t get a friendly response, try a credit union. They’re often easier to deal with than big, national banks.
- Idea two: Get a cosigner. Having someone cosign a loan or credit card means they’ll assume responsibility for your bills if you don’t. There will, of course, be very few people willing to take on that kind of responsibility, but if you can find one, it will help.
- Idea three: Become an authorized user on someone else’s credit card. This means getting a credit card tied to someone else’s account. They remain legally liable for the bill, but you get a credit file established. The good news is that piggybacking on someone else’s credit file essentially gives you an instant credit history. The bad news is that if their credit history goes south, so does yours.
- Idea four: Open a department store charge account. They’re typically easier to get than credit cards from banks. These cards, however, carry high interest rates and obviously can’t be used elsewhere.
- Idea five: Get a secured credit card. This is a credit card secured by money you put up as collateral in a savings account. Put up $500 of savings, get a $500 limit. This is the easiest credit card to get, but be sure they report your timely payments to credit reporting agencies; not all do. You can search for secured credit cards here.
- Idea six: Don’t worry about building a credit history. While it may be hard to believe, there are billions of people in the world who don’t use credit. Some of those people may even be your friends and neighbors.
Like everyone who’s starting out or starting over, you’ll ultimately develop a credit history simply by paying your bills on time, every time, for long periods of time. But keep in mind that credit isn’t mandatory or even necessarily desirable. There are more important things in life than having the ability to pay interest to a bank.
What to do when you have no health insurance
It wasn’t long ago that there was no answer to the question of what to do if you needed health care and couldn’t afford it. Today, however, you have options.