Let’s normalize talking about our credit histories

In December 2019, Seattle-based copywriter Brittany Brown was in “a rough financial situation.” She was several months behind on rent and unable to make a $25 minimum payment toward the $2,000 maxed-out balance on her credit card.

“I had intended to ask someone if I could borrow the $25, but with the holidays and chaos of the month, I forgot to ask in time and it went on my credit report as a missed payment,” said Brown. “I still remember that gut wrenching feeling. This missed payment has haunted me so much.”

The one missed payment tanked Brown’s already-low credit score, and she needed several years to recover.

“I felt so much shame and embarrassment that I wasn't able to make a $25 payment on time.”

Many people have felt the shame Brown described — and they believe they’re alone. In reality, eight in 10 Americans hold some kind of debt, with 39% holding unpaid credit card balances, according a 2015 study from Pew Trusts. The vast majority of them say credit cards are essential to help them pay for necessities, but they’d still prefer not to have that debt, reflecting the cultural shame around the subject that keeps us from sharing these stories candidly.

“There's always a chance you'll make people uncomfortable if you talk about your finances, but I'd argue that there’s no other real risks,” said Lindsey Stanberry, founding editor of Refinery29 Money Diaries and author of the “Money Diaries” book.

Learning others’ experiences with money is important for reducing stigma and helping us all better understand our financial circumstances. Credit scoring is a famously opaque practice, and fear and confusion put consumers at a disadvantage. Negative marks on credit reports often come as a surprise to folks who believe they’re making responsible money moves.

When "responsible" moves hurt credit scores

Kelly Schulze was let go from their job in 2021. Their family was “making it OK” on Schulze’s husband’s paycheck and a shared credit card with a balance that rode near the limit for months. A high credit utilization weighs heavily in a credit score, so this dragged down both spouse’s scores.

A tragedy turned out to be the couple’s financial salvation: Schulze received an inheritance in 2022 after their father’s death. That helped the couple pay off the credit card debt and Schulze’s student loan debt all at once — but they didn’t expect the effect on their credit scores.

Paying down the student loans dropped those accounts from Schulze’s credit report, reducing the age of their debt, another little-known credit score factor. Having a lower average age for debt brought their score down.

“It was a blow to see how drastic of an impact paying off large amounts of debt had on our credit scores and made me mad at the system,” said Schulze.

This isn’t the only seemingly responsible money move that can lower your credit score. Douglas and Heather Boneparth, who write the newsletter The Joint Account about relationships and money, saw temporary dips to their scores when they refinanced graduate school loans in 2016 and 2017 and a mortgage in 2020. Refinancing requires taking out a new loan, which dings your credit score.

“The good news is that it’s usually a short-term blip,” said Douglas. “[But] it’s important to recognize the impact refinancing can have on your credit score even if it’s temporary.”

Insecurity about how credit scores work

Another little-known credit factor, applying for new credit, dinged Brown’s score recently — and she didn’t even realize she was doing it.

“[This] hurt my ego more than my credit score,” Brown noted, as her score only dropped about five points temporarily.

Brown was researching a Lasik procedure. She answered a series of questions from her doctor’s office, expecting to learn more about her payment options. “I got to the last page, and it turns out I applied for a credit card. I was so embarrassed and so agitated.”

Brown immediately canceled the card (and never scheduled the procedure), but the new application for credit still appeared on her credit report. After working her way out of tough financial straits, she still keeps a close eye on her credit score and can see it dip between two and five points if her utilization goes over 10%, which can be nerve-wracking, if not significant.

Applying for new credit — even when it’s intentional — is a common challenge for anyone keeping an eye on their credit score.

“The hardest thing for me has been opening new credit cards and having that hurt my credit, and being afraid to close old credit cards that I don’t use for fear that will decrease my credit,” said 27-year-old Maria DeVoto of New York City.

Even though DeVoto’s parents helped her build the habit of spending carefully on her credit card and paying off the balance each month, the obscurity of credit scoring still shakes her confidence. “My insecurity with credit cards and credit scores is that I feel like I still don’t fully understand how they work.”

Your credit score doesn’t define you

The best-kept secret about credit scores is that a negative mark to your credit doesn’t necessarily doom your financial future. Central-Illinois writer Michelle Teheux once tanked her credit score on principle — and talked her way into a mortgage in spite of it.

One weekend around the year 2000, Teheux wanted to turn a giant pumpkin into frozen puree for pies. Slicing into it, the knife slipped and cut her finger deeply. She had it stitched in the emergency room but couldn’t see the hospital’s hand surgeon until Monday.

“[I knew] the nail bed needed to be absolutely flat for the nail to grow back properly and that waiting two days was not ideal,” Teheux said. “I was rather pissed that the specialist blew me off like that.”

After a quick check-in with the specialist the following week, she received a bill she thought was “completely outrageous,” so she never paid it. About four years later, Teheux applied for a mortgage, and the unpaid bill surfaced during her credit check.

“I explained what had happened and said I'd be willing to pay the amount to a charity if they wished, but that there was no way in hell I was giving a penny to that doctor,” Teheux said (although donating to charity would have no impact on the debt or her credit report).

She was able to get the mortgage. Texheux, now 58, added, “I also started buying canned pumpkin.”

Hearing stories like Teheux’s might soothe some of the shame and financial anxiety younger people like DeVoto and Brown are suffering.

“Knowledge is power, and understanding where you stand compared to your peers can be enlightening,” said Stanberry, who now runs The Purse, a newsletter that includes contributor confessionals about finances and household labor. “This applies to everything from salaries to student loan debt to credit scores.

“We need to normalize talking about these things in order to take away the shame and confusion.”