The Worst Credit Score I Have Ever Seen

I’m in the market for a new set of tenants these days.  On Thursday I had the pleasure of meeting two young ladies and their entire family as they came to look at what will be their first apartment.  I sent both girls a link to an electronic background and credit check service that I am now using on all tenants since the last one decided to become a drug dealer.

Once they agreed to the terms and paid the application fee, I was given access to their criminal history and credit check.  While I learned that they were not on the terror watch list, I also learned that they are young, cute, sweet, and broke.  In fact, one of them has the worst credit score that I have ever seen in my life.  I knew that a score under 500 was possible, but I had just never actually seen a score beginning with a 4, especially since it’s attached to a 21 year old.  Let’s refer to her as Ms. Holy-Crap-That’s-A-Horrible-Score.

Going through Holy Crap’s credit report, I realized that there was a major pattern that led to her horrific credit score.  She, like many young people, liked spending money, but she didn’t like paying her bills.  What bills can a 21 year old possibly have, you ask?  You get two guesses.  If you guessed student loans, you have that right.  If you guessed store credit cards, you were also correct.

I find store credit cards to be a dangerous tool in the hands of someone barely old enough to go to Las Vegas.  It’s easy to toss this season’s must have clothes on a store credit card, but it’s hard to pay the bill, especially since most of those cards come with a 29.99% interest rate.  Resist store credit cards, even if they offer you 20% off your first purchase.

Back to the student loans.  Ms. Holy Crap had a number of student loans, but I don’t believe that she finished school.  Her school loans had entered repayment some time ago and instead of sending in the $50 payment or asking for a deferral, Ms. Holy-Crap-That’s-A-Horrible-Score decided to ignore the good folks at her local student loan office….for months…and months…and months.  She was more than 120 days past due on a number of student loans.  The student loan people can be lethal when you don’t pay them or when you ignore them.  Remember, you never get to charge off student loans.  That debt will follow you to the grave, reach in, and pull the ring off your finger to make sure that they get paid.  Okay, maybe not that extreme, but I wouldn’t put it past them.

But wait, there was more!  Ms. Holy-Crap-That’s-A-Horrible-Score has FIVE accounts currently in collections.  They’re not for a lot of money either.  The total debt in collections is a bit over $3,000.  It’s a decent amount, but she probably will not have to pay that much if she calls each creditor to negotiate a payoff amount.

You thought that I was finished, didn’t you?  Nope!  There’s one more area here Ms. Holy Crap has been shooting herself in the foot.  She keeps applying for more credit all over the place.  In the past year she has had 15 hard pulls (meaning that she applied for credit).  These inquiries typically drop off a credit report after three years.  Too many inquiries can have a negative impact on your score.  In her case, she already had a bad score and kept making it worse by applying for credit over and over again.

So what can we learn from this? This should be easy.  DO NOT DO ANYTHING LISTED ABOVE UNLESS YOU WANT TO SEE HOW LOW YOUR CREDIT SCORE CAN GO.  In my case, I’m actually willing to give her a shot as a tenant.  She has a steady job and is supposedly learning for her past mistakes since I couldn’t resist pointing them out to her.

Plus, her foster mom secretly agreed to cosign the lease after I gave Ms. Holy Crap a copy of her credit report. I’m not a sucker.

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27 thoughts on “The Worst Credit Score I Have Ever Seen

  • Store credit cards are very dangerous for young adults. You only have to be 18 to get one, right? That’s insane. Poor girl. Well, hopefully the cute young girl learns a lesson with this. Maybe she’s never had her credit checked before and needed this kick in the butt.

  • Does your new tenant know that by “giving her a shot” you’re really making a fool out of her and sharing her finances on your blog? Glad you’re not my landlord.

    • She didn’t name names, so she’s fine. She’s leaving her tenant in a state of anonymity while demostrating for others what should and should NOT be done. You, are another story

  • You know, that young lady had probably been through a lot in her life. It seems in bad taste to disparage her bad credit score publicly on your blog. Like you’ve never been wrong. Like you’ve never been young and stupid. Like you’ve never made mistakes in your life.

    I filed for bankruptcy last year, and at one point, around 2009, my credit score was 4 something too, thanks to credit card debt that defaulted. Yes, it was dumb, but I learned from it.

    I just don’t get the point of a post like this. And screening out tenants for paying RENT because they didn’t pay a CREDIT CARD or a STUDENT LOAN seems …well, illogical. A history of not paying rent would be the most relevant thing here, no?

    Or maybe you’d rather just have a drug dealer with a perfect credit score.

    • Oh C, if you don’t think that most landlords look at credit these days you are wrong. I’ve learned this lesson the hard way. And not only do landlords check, but so do employers. What does your credit have to do with your ability to do your job you might be tempted to ask your employer. In my case, she will have a revolving fiduciary relationship with me, so it IS relevant.

      I make mistakes all the time and regularly share them here so that everyone can learn from my own mistakes. That’s one of the purposes of my blog. I put it all out there. And after speaking to her foster mom, I know quite a bit about her history, none of which had to do with her credit decisions. Her mom felt that she needed to learn the hard way, but she, like most parents, is there to catch her when she falls.

      • Checking credit score to see if they’ll pay? Next thing you are going to say you charge actual dollars for rent.

        TERRIBLE! You should be ashamed of yourself.

  • Wow. Up until the end, I would have thought that this tenant applicant had her identity stolen and didn’t know anything about it until you asked to check her credit.

    Did you ask for the co-signer’s credit report too?

    • It is, but I understand being 18 and having the world of credit open to you when you have no real knowledge of the impact that it can have on your life for years. That’s why I don’t mind giving her a shot and reporting her payments to the credit bureau so that it can possibly improve her score.

  • Several years ago my TransUnion credit score was 494. (Oddly, my Experian score was 620, and Equifax was 550 at the same time.)

    The short story is that I had had an abrupt health collapse and extended hospitalization, with zero income, and was unable to work for over a year.

    All my open accounts went unpaid and were closed and charged off. As I had no assets and no savings, I also had no reserves from which to draw while I was unable to work.

    • This is actually the #1 reason for filing bankruptcy. All it takes is one major health incident. I talk about that in a post called One Disaster Away. The difference between you and her is that she didn’t have such health problems and chose to ignore her mom when her mom kept giving her solid advice.

      And her score is lower than yours.

  • I cannot imagine being 21 years old and finding yourself in this situation. This is a perfect example of lack of financial education and lessons in responsibility. I had my first credit card at 15 years old and because I had responsible behavior for many years early in life I was actually complemented on my credit score for my age when I had to take out a loan for a used car at 23 yrs old. But maybe i’m biased, I am an accountant for a living. You make some great points in this post, great read!

    • Thanks Blair. Unfortunately before the CARD Act I’m afraid that the rules allowed for a teenager to get themselves in serious financial trouble that could impact their lives for years to come. She wasn’t really aware of how bad it was until our conversations. Now she understands that her mom wasn’t just nagging her since she could not get an apartment and lost a job offer because of her credit.

  • Perhaps it would be a better practice to not use a snarky term to describe the individual? You make some good points in your post, but calling her “Holy Crap” doesn’t cast you in the best light.

  • Whoa! That’s a lot of bad financial mishaps in such a short adult life! I royally screwed up in my mid-twenties and tanked my score by 29, but I wasn’t 21 (and it wasn’t in the 400-range). Hopefully she has learned from her mistakes and is working on a repayment plan for her student loans. Good luck on selecting her as a tenant. I’d be skeptical.

  • That was nice of you to give her a chance. Hopefully, she will learn something from this. This is one of the many reasons I believe we should start teaching our children from an early age how to manage money.

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