Why are people so focused on credit scores these days?
Every time I go online, I see another article with tips or strategies or warnings about knowing your credit score.
For many people, it's a lot like staring at your gas gauge when driving your car. If you've got plenty of gas, you don't need to keep looking at how much gas you have. Just focus on the road, and enjoy the ride. If you're running low, you know you need to stop soon for gas, but no big deal. But, if you're about to run out of gas, forget about the gas gauge and find the nearest gas station ASAP!
The same is true for credit scores - if you've got lots of money and you don't use your credit cards that often, then you really don't have much reason to look at your credit score. Instead, keep doing what you are doing! You must have a good sense about managing your money. And if you use your credit cards but pay them off every month, just make sure they all get paid on time and you don't miss any payments by accident.
But if you're having trouble paying your bills, and you're losing sleep over debt, then "good credit" is a false hope and you need to get your butt in gear and find a way to pay off your debt! Because you can't really live with too much debt and good credit at the same time, regardless of your credit score. So spend your time on finding ways to fix your money problems (make more, spend less - you get the idea) and NOT worrying about your credit score.
It drives me nuts when people say "I'm drowning in debt but I don't want to get help because it might ruin my perfect credit." Are you serious? You have too much debt, but won't get help because you want to save your credit score? Sorry, but you've got this all backwards.
OK, here are 3 good reasons why you should totally ignore your credit score when you're struggling with debt:
1) Credit scores are used for borrowing money. And if you've got a bunch of debt then you probably shouldn't be borrowing any money in the first place (and that includes credit cards, retail financing deals like 12 months no interest, store credit cards - not just loans). You should be working on paying down your debt (because too much debt lowers your credit score) and paying your bills on time (because paying late lowers your credit score). What is a good credit score? Here's a good explanation to help you understand your credit score.
2) Holding onto "good credit" is meaningless if you're trying to pay off debt. Even if you think your credit is great, and you've always paid on time, if you owe too much then your credit is not as good as you think it is! So given the choice between getting out of debt or keeping your "good credit" you absolutely should focus on getting out of debt. Unless you're in big business like Donald Trump, there is no such think as good credit card debt. Especially if your interest rates are above 15%! Hey, you can worry about your credit later...
3) Despite what "the experts" say you CAN fix your credit. I know. Because I did it. It does take some time, and some effort. But it can be done. And I'm SOOO glad I didn't wait any longer by holding onto the idea that I didn't want to hurt my credit. Because in the end, I saved much more money by getting out debt. If you're one of those people who can't pay your bills but won't get help because of the credit score impact, do yourself a favor and get rid of your debt first. Fixing your credit is much easier. And nobody loses sleep over a credit score!
Let me put it to you in real simple terms:
- First of all, it sucks to lose sleep over debt.
- And, the more debt you have the faster it sucks money out of your bank account or wallet, because of all the interest and fees.
So if you're dealing with too much credit card debt, then STOP watching all the ads for free credit reports, and STOP reading all the articles telling you how important it is to know your credit score.
And focus all your energy towards paying down your debt.
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