In the olden days, our credit worthiness was based on a method of “good faith” and a handshake. Those days are long gone. The “good faith”/handshake method has been replaced by an elusive 3-digit code known as our FICO score.
Our FICO score is determined by various factors and depending on where you land on this spectrum (spectrum being a scale ranging from 300-850), it can have a positive or negative impact on our buying power.
In the initial phases, our credit score was used when it came time to buying a house or a car or getting a loan for a start-up business. Nowadays, our score is being utilized by Prospective Employers, Utility Companies, Car Insurance Companies, even in the quest for renting an Apartment. Your score will impact whether or not you get that job, or how low your car insurance rate is, or if you get to move into that apartment with the great view of the park. So having a good credit score is definitely beneficial. In the eyes of financial institutions, a good credit score deems you financially responsible.
This brings me to the core of this article by asking the question: Aren’t there responsible people with bad credit?
Of course there are. We’re not talking about the over-indulgent shopaholics. The “Mr. & Mrs. Keeping Up With the Joneses” who spend far more than they make only to show off with family and friends. We certainly do not sympathize with people whose inferiority complexes drive them to poor spending decisions. You know who you are.
Life happens and sometimes circumstances beyond your control will create negative impacts on your life. Sudden and unexpected medical bills, natural disasters and unemployment are only a few examples of serious uncontrollable circumstances. When these unfortunate events take place, an empty rainy day jar can leave you devastated and ruined. But guess what? There is always a way to climb out of that debt pit of despair.
The human spirit filled with hope has long been the champion of success stories. The pure desire to get out of a bad situation will often create enough motivation and strength needed to correct any situation.
Don’t believe me? Ask anyone you know of a time in their life when a situation looked hopeless, but they hung in there and eventually triumphed.
Debt and bad credit can sometimes make you feel hopeless. A good credit score can be as elusive as Bigfoot himself. That doesn’t have to be the case. For change to happen there has to be action. Here are four steps you can take to start fixing your credit right away:
1. Itemize your monthly expenses – See where you can cut down on spending and know when your bills are due to avoid late payment fees.
2. Create a system that works for you – some companies will allow you to change your payment due dates and even lower your minimum amount due. They would rather have a little bit of your money than of none at all.
3. Communicate with your debtors – let your debtors know what you can and cannot pay. Try to lower interest rates to reduce balances. If you’re comfortable with automatic withdrawals, this can be another bargaining tool to reduce payments.
4. Consider a loan to pay off all smaller bills – If you’re in good standing with your primary bank, a personal loan can pay off several small bills. This will raise your credit for paying off the smaller bills and leave you with only one payment to the bank.
Though credit is not the end all of life, it is important and you may find you need a good credit score during an extremely important time in your life. It’s not as hard as you think to fix your credit and it’s one decision you’ll be glad you made.
So what say you? Credit is or is not a big deal? Is cleaning up your report on your to do list for this year? Let me know your thoughts and share this article if you found it helpful.
There’s more where this came from. Check out additional ways to improve a credit score