Overcoming Bankruptcy, Bad Credit And $30K In Credit Card Debt: A Credit Success Story

Kate Raidt has said that bankruptcy is the best thing that ever happened to her.

In a blog post on her website, kateraidt.com, Raidt said it was the wake-up call she needed to turn her finances around.

“The day I filed at the courthouse I remember saying to myself ‘I will never allow this to happen again. For the rest of my life I will be responsible with money.’ And I have stuck to my word,” she wrote.

Now, Raidt owns her own sales coaching business, teaching salespeople, entrepreneurs and business owners how to improve their selling strategies and increase sales.

I asked her about her credit success story, including how she got to where she was, how she rebuilt her finances to where she is now, and what advice she has for those who are in similar situations. Here’s what she had to say.

Parental Guidance

Our relationships with money often go back to the ways we saw our parents deal with money (or lack thereof) when we were younger. Raidt explained how her parents’ complicated financial situation while she was growing up affected her own ability to keep her finances under control.

“My parents were always in financial trouble. As my mom once said, ‘If your dad made $20K in a month, he found a way to spend $30K.’ Zero concept of saving money,” Raidt said.

Raidt said she believes that children absorb the money habits they see their parents display.

“I never had trouble earning money. I had no concept of how to save any of it or how to live below my means,” she said.

Getting Into Debt

When she was in her 20s, Raidt was living in Hollywood and pursuing a career in music. Both of these things came with a very high price tag.

“It was a small fortune to record an album, pay hired musicians to be in my band, marketing materials, etc. I put a lotof my music expenses on credit cards,” she said.

Unfortunately, the high cost of living and the high cost of being in the music business weren’t Raidt’s only problems.

“I also was a shopaholic and went shopping every single weekend,” she said.

Raidt knew she was in trouble once she started having a hard time just keeping up with her minimum monthly payments. Once all was said and done, Raidt believes she accumulated around $30,000 in debt, all on credit cards.

The Turning Point

After filing for bankruptcy in 2001, Raidt was adamant that she’d never get herself into the same situation again. She resolved to rebuild her finances and her credit, even as she worried that her credit score would be stuck in the 400s for the rest of her life.

Paying off student loans helped improve her score, she said. She also made sure to always be on time with rent and car payments. 

“I was just very good at being financially responsible every day going forward,” she said.

What She’s Learned

Raidt’s low credit score, debt and bad money habits are all behind her now.

“My credit score went up to 810 not too many years after I filed for bankruptcy – and has stayed there,” she said. “I was surprised how quickly I was able to recover. I bought a house, took out a business loan with no trouble at all.”

After overcoming her credit card debt, Raidt never applied for another credit card.

“I think it is really bad advice when experts say the only way to build credit is through credit cards. That’s simply not true,” she said.

So, what advice does she have for those looking to rebuild their credit after a major setback?

“I’ve learned that life goes on even with bad credit,” she said. “But you must learn from it and not make the same mistake again. You truly must change your habits and surround yourself with good people who are not spenders.”

For Raidt, changing her habits was a matter of being more cognizant of the things she was spending her money on.

“I have learned to ask myself ‘Do I want this – or do I need this?’ 99% of the time it’s something I want but don’t need.”

It also helps to have the support of someone who counters her spending habits: her husband, who is “super conservative with money,” she said.

“This has been a lifesaver. My advice to people who are spenders: make sure you marry a saver.”

It’s Never Too Late

Even if you feel like your credit or debt situation is too far gone to salvage, remember that there are plenty of people like Raidt who have been able to take charge of their financial futures and take their credit scores from “bad” to “excellent.”

The first step to fixing your finances is recognizing the root of the problem, whether that be bad spending habits, not making payments on debt or living above your means.

It’s also important to be diligent about where you’re at and how the decisions you make each day affect your credit and finances as a whole.

To get access to a great tool that helps you track your credit, create an account with Rocket Homes℠ to stay up to date on what your credit score is doing and to learn how your financial goals could affect it in the future. You can also check out our free resources for credit and personal finance.