You’re probably familiar with the concept of a “white lie”. That’s a fib in which you either distort facts or deny the existence of a situation because it probably won’t hurt anyone – or so we like to think. In truth, most white lies occur not because they’re harmless, but precisely because they can cause problems. Keeping credit secrets is a prominent example of what we like to think of as a white lie.
How Credit Secrets Play Out
Credit secrets usually start small and seemingly “innocently”. They can take different forms.
The secret loan or credit card. Most credit secrets get started with a single loan or credit card. Your intentions may even be good – you may incur a debt for all the right purposes, with the intention that it will be temporary. But it later becomes obvious that the debt will be ongoing, and that’s when the secret becomes more permanent.
The secret high credit line balance. Small debts have a way of turning into big debts, especially when they are accumulated in secret. The cover up removes accountability, and the debt is free to grow, sometimes to alarming levels.
Secret collection accounts. If you are unable to make good on a debt, it may go into collection status. In order to hide the derogatory information, you may send signals that the obligation has either been paid in full, or simply hope that the memory of the debt disappears. At this point, it’s no longer just a credit secret, but an attempt to conceal a real problem.
Hiding an entire credit profile. You start with one loan that is not disclosed, and before you know it, you create an entire credit profile that people who are close to you know nothing about.
What Motivates People to Keep Credit Secrets
At the time that you embrace credit secrets, you may be doing it for what seem to be the right reasons. But there are a host of intentions that may not be so harmless.
Embarrassment. This is often the major reason behind credit secrets. It may simply be that you are reluctant to admit to a credit mistake, or worse, a pattern of mistakes. This could lead others to think less of you, which motivates you to keep the situation quiet. The problem is that the cover up is driven by emotional factors, and not by a set of logical solutions.
Desire to continue certain spending patterns. This is also a very common reason for keeping credit secrets. If you have a strong desire to continue certain spending patterns that your income does not support, then the use of credit – and secrecy – can become a way of life. This is even more true if credit is secretly being used to maintain an unaffordable lifestyle.
Fear over revealing the true extent of credit problems. If it’s tough to admit to having a single undisclosed credit line, the thought of revealing serious credit problems can be scary. This is true not the least of which because credit problems have the potential to threaten your loved ones, and not just you personally. You may keep your credit problems quiet much longer as a result.
Loss of trust. “If I tell my wife how much money I owe, she’ll never trust me again.” That’s not an inconvenience, but something that has the potential to destroy your marriage. Credit secrets can make your partner wonder what other aspects of your life you’re hiding from them. That loss of trust could potentially end the marriage, and the awareness of that outcome is what drives you to keep the secret going.
Why Credit Secrets are so Dangerous
Credit secrets – especially big ones – aren’t just an oops situation. They can result in significant distress to all parties concerned. Here are some examples:
It can make your financial situation appear stronger than it really is. Though your situation may actually be deteriorating from the inside out, you and your family will carry on as though the problem does not exist. That leads to a false sense of security, which can produce decisions that are based on incorrect assumptions. For example, the family may decide to take an expensive summer vacation, when instead they should be consolidating resources to pay off a festering debt.
It puts off the day of reckoning, making the situation worse. Secrets enable problems to grow. That’s because they allow you to delay action, and even recognition, that a problem actually exists.
One secret begets another…and another. This is the fundamental problem with credit secrets – they’re never harmless. If you can successfully cover up one credit situation, you can do the same with others. It becomes self-perpetuating, leading to a point where you are living a lie.
It denies you the opportunity to get help. This is probably the most dangerous aspect of credit secrets. When you are invested in a cover-up, you are not seeking the help from others that can enable you to solve credit problems. That includes getting help from family and friends, or even seeking professional remedies.
Credit secrets have a way of coming out at the worst possible time. They’re often exposed by unexpected situations, where they cause problems. For example, perhaps you and your spouse need to buy a new car, but the financing is denied (or you’re offered high-interest subprime financing) as a result of either excess debt levels, or derogatory credit information on your secret loans. Not only do the hidden loans come to light, but there’s now a financial penalty attached to it.
What to Do If You’ve Been Keeping Credit Secrets
The only way to deal with credit secrets in a realistic and practical way is change direction and to attack them head-on. That’s a multi-step process.
Come clean. It isn’t just the right thing to do in regard to the people you have been keeping credit secrets from, but it will also free you to move in a positive direction. Once the veil of secrecy is removed, you will be in a better position to take whatever steps are necessary to turn the situation around.
Take responsibility. Simply admitting to keeping a damaging secret is a big step, but it’s equally important that you take responsibility. That means taking responsibility not only for maintaining the secret, but also for the factors that caused the debt situation to develop in the first place.
Be proactive in developing a get-out-of-debt strategy. The last thing that you want to do is admit to covering up a credit situation, and then expect others to figure out a way to solve it. You must actively participate in taking steps to fix the problem. And that means not only paying off the offending debt, but also developing a strategy for not accumulating secret debt in the future, even if that means exposing yourself to close scrutiny by the people closest to you. After all, you made a mistake and you need to fix it.
Get professional help. One of the biggest problems with keeping credit secrets is that they can enable the situation to reach a critical level. It’s very common for credit secrets to be exposed only once the problem becomes threatening in a way that can no longer be concealed. This happens because a small credit problem becomes a big one. Once you get too deep in debt, it’s likely that your credit will begin to slip. That’s a problem that is not easily repaired. If that’s the case, you may need to get professional help, both to repair your credit and to deal with excessive loan balances.
If that’s the case, swallow your pride and get the help that you need. There are law firms that specialize in credit and credit repair, and if your situation has gotten out of control, you’ll need that kind of assistance.