The Importance for a Recovering Addict to Build/Rebuild Credit
Apart from the fact that you are recovering from an addiction that was nothing short of a stranglehold on your life, you are no different from anyone else. You want the same things in life that your friends and family want and in many cases, have already. Food, shelter, clothes on your back, furniture to sit on and maybe if you are lucky, a TV, and a few other luxuries aren’t a whole lot to ask for, right?
Recovery is an incredibly humbling process. Along with getting clean and staying clean, as if this weren’t hard enough, you now have to rebuild everything essentially from scratch. In many cases this means the trust of family and friends, a career, security and finding a place to live that is your own. Many addicts return from rehab to live with parents, friends or siblings, but it isn’t long before this arrangement gets old. Although you need them to go through the day-to-day, the clock is ticking. Both they and you have an eye on the future, which means independence of course, when you are ready and it doesn’t jeopardize your sobriety.
It is easy to get ahead of yourself and think that everything has to be accomplished yesterday. The importance of sitting still can’t be emphasized enough. But there are many things you can do in order to make the next phase of your journey a successful one. Nothing puts you at risk for relapse more than something that could have been easily prevented with a little planning.
Your Future Starts Now
It isn’t uncommon for addicts to let their credit slip when they were using. If you want your own apartment, a car to get to work, a place to lay your head at night, and a few toys like a TV, you will need credit. Even if you intend to pay cash for everything, it is nearly impossible to do anything without someone peeking into your credit history. At minimum, to qualify for an apartment, to open accounts with utility companies and to get a job require good to excellent credit. Everyone is risk adverse these days. With the default rate on credit cards, mortgages and loans as high as it is, nobody is willing to take chances on extending credit to anyone with poor credit. If you were unable to keep your job when you went to rehab or because you were using, it will be tough to get a new one without good credit. Many companies use credit scores as a means of weeding out potential slackers from those they assume will put in an honest day’s work. The irony of course is that fewer people are more likely to give a job their all than someone who has everything to lose by messing up. However, most businesses don’t see things that way and so good credit will vouch for you.
The first step to rebuilding your credit is to order copies of your credit report. There are three credit reporting agencies in the US. If a person has a social security number, TransUnion, Equifax and Experian know everything about a person’s credit history. You are entitled to one free copy annually from each credit reporting agency. There are two things you will want to look for immediately on each of your three reports:
- Credit Score, also known as FICO
- Any discrepancies on the report
Your Credit Score
Credit scores are broken down into ranges. Where you fall in those ranges tells any creditor or potential job all they need to know about you. Bear in mind that you don’t usually have the opportunity to plead with someone who sits behind a desk and makes decisions based on these criteria. Although you can sometimes speak directly with an apartment manager or a human resources person, in general, assume that you are being judged on a series of numbers.
FICO ratings are a mathematic estimate of your credit worthiness that has a range of between 300 and 850. The closer you are to 850 the better. Anything below 620 is considered poor. The further away from 850 that you are, the more work you have to repair that number. If you ever plan to apply for a credit card or a loan, the difference between those numbers can mean either low or high interest rates. The higher the interest, the higher the loan amount and the longer it will take you to pay it off.
Another thing that you will want to very mindful of when reading your credit report are any inaccuracies. These can take the form of an incorrect or misspelled name, an address you never resided, or worse, a defaulted loan or credit card that never belonged to you. If you detect any errors, the first thing to do is contact the credit reporting agency to let them know of the mistake. Sometimes it is as simple as them contacting the creditor to verify an error was made and then removing the error in question. Sometimes it can be a lengthier process to have disputed information removed. Repeat as necessary until your credit report accurately reflects you.
Rebuilding Your Credit
Once your credit report is correct, the next step is restoration. If you defaulted on a credit card or a loan, it’s time to pay the piper. Contact each creditor and make arrangements to repay the money. The purpose of this is two-fold. Not only do you want your FICO score to rise, but as someone in recovery, it is important to make amends not just to friends and family you harmed. Part of amends also means getting right with businesses and anyone you left owing a debt to. We all make mistakes; it is now up to you to make good on them. You aren’t just rebuilding your credit but your character as well.