Life Without Credit: Samantha's Early Years
By Dawn Handschuh, Personal Finance Writer
The first in a three-part series...
A solid credit history can pay dividends for a lifetime as your financing needs evolve. Good credit lands you the best rates when you borrow money, potentially saving you thousands of dollars in interest payments. And in today's risk-averse world, having a track record is practically a requirement when applying for a job, renting an apartment or purchasing a cell phone.
To show how challenging commonplace transactions could be without credit, we're tracing the life of a fictitious young woman named Samantha who confronts many of life's defining moments — college, first car and career — without credit.
There's not much to do in Cash Only, Arkansas, Samantha's hometown, but the area has fresh air, abundant sunshine, and more than its share of bustling small farms producing everything from U.S. prime beef to fancy heirloom vegetables for the city people up north in Plastic City.
Samantha's family owns a third-generation dairy farm with 54 bovine beauties that enjoy air-conditioned stalls and all-you-can-eat buffets.
After graduation, she dreamed of becoming a veterinarian, ever since Bessie #11 kicked the bucket during calfbirth. A bright student, Samantha won a $20,000 scholarship to Cornell's College of Veterinary Medicine, where first-year tuition for out-of-state residents runs $50,000. Problem was, with feed prices rising and milk-price volatility playing havoc with the family budget, Samantha's parents couldn't cough up the balance.
Samantha was devastated. With no credit available, she couldn't apply for a student loan, even though she would have easily qualified. She watched in sorrow as her more affluent friends hung up their overalls and departed for Arkansas State.
Her career had stalled, but Samantha remained determined. She would save the $30,000 by waitressing for a year — tops — at The Hard Way Diner, then join the freshman class the following fall. But tips were stingy, the customers cranky; even after picking up occasional extra shifts, she was still short of her goal two years later.
She blew $4,000 on a 10-year-old clunker that proved to be a money pit. Right now it needed a new muffler, but Main Street Auto accepted only cash or credit cards. Having neither, she ignored the rattle and got a $200 ticket on her way to work.
Samantha resigned herself to another year of waitressing. She was still living at home (landlords wouldn't rent to her without a credit history), and she squabbled with her parents often. She felt trapped.
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