Why People Are Scared Of Bad Credit Scores
There was a story on MSNBC.com today regarding what’s coming as it pertains to credit cards, and none of it is good news. Some of what the story talks about I’ve addressed here in different stories, while some things are new. In essence, he has six points, which I’m going to list here, and I hope you go read the story to get the rest of it on your own:
1) More cards with annual fees
2) Fixed-rate cards changed to variable rates
3) Increases in interest rates
4) Increases in existing fees
5) New fees
6) Futzing with rewards
So there you are, this big news story, and, like many online newspapers these days, they allow commentary on the news stories. And the first commentary just stuck in my craw:
“DO NOT!!!!! Repeat: DO NOT!!!!!! Cancel credit cards. Pay them off but don’t cancel them. Doing so will drop your credit score.”
I’m sorry, but it’s about time someone addressed this thing about credit scores and why so many people are scared about them falling. If you follow this blog, you know that not only am I not scared of a bad credit score, but I really believe that credit scores are worthless (and how nice it was to find out that I’m #1 on Google for the search term “credit scores worthless” and #3 for the search term “worthless credit scores). what is it about credit scores that seems to scare so many people? Let’s look at this point by point.
1. People worry that a bad credit score will keep them from getting new credit. That may or may not be true. It really depends on what you want credit for. The truth of the matter is that if you can afford to buy things you really should be looking for new credit anyway. If you are looking to buy a house, you should be trying to put away as much money as you can so that you can afford a nice down payment. A bad credit score means almost nothing if you have a nice down payment of at least 25% or more. If you have a bad credit score and you know it (if you’re getting your annual free credit report you should know it), then you should know better than to be trying to get a new credit card in first place. Even so, you can probably still get a credit card. True, the industry might be higher, but interest rates are going up anyway and they’re going to pick on people whether you have good credit or not.
2. People worry that a bad credit score will keep them from getting a new job. There are certain jobs for that might be true, but the overwhelming majority of positions that are out there in the world are looking at credit scores at all. If you have great qualifications, even those jobs that check credit scores are probably going to hire you anyway. What those employers are looking for when they look for credit scores are any indication that recent death of gotten so far out of hand that you might possibly be thinking about doing something criminal. And by the way, these employers look to get your credit report, it’ll see a credit score anyway, so that doesn’t matter at all.
3. People worry that a bad credit score will keep them from getting a new apartment. I pretty much addressed that in number one and two. If you have enough money for a down payment most apartment complexes are even going to check your credit report. And, credit scores on credit reports anyway so you still don’t have anything to worry about as regards your credit score. Now, if your credit report looks bad the might have something to deal with.
4. People worry that a bad credit score is an indictment against the type of person that they are. Very few people care what your credit scores. True, a bank might care about your credit score if you trying to get a loan from them of some fashion, he might have some difficulties with some car dealerships trying to get a brand new car if your credit score is pretty bad. The truth is you will still get a car, even if the interest rate is higher, but the more money you can put toward your car the last interest rate is going to be. Banks are a different story, especially after the fiasco the housing market caused in many states, and I’ll think anyone really wants to follow banks are being a little more cautious with how they’re loaning out their money. Here’s a couple of things you may not know.
One, you have more than one credit score. There are three credit reporting agencies, and each one has a different credit score. That’s because they all have different criteria for what they report, and sometimes, if you get all three credit reports, you’ll see something on one that’s not on other and that will affect your credit score.
Two, at least have to credit reports out there or wrong in some fashion. I’ve seen my name misspelled, addresses totally wrong, cards that show as open when they were paid off and closed years ago, wrong employers, and wrong addresses for that employers. When you know what people are looking at, and you do this when you’re getting credit reports on your own, you know beforehand what’s going on in your credit report and you should get any errors fixed that might affect your financial standing.
All in all, the way people obtain credit has already changed, and it’s probably never going back to the days we were all used to when we used to receive 14 to 20 credit card offers a day in the mail. I know, I’m exaggerating, but it certainly felt that way. People who supposedly have good credit scores these days are finding it hard to get some banks to give them loans for homes. If someone with a credit score of 750, which is considered really good, can’t get a loan and why is anyone else worried about their credit score? you know what supersedes a credit score?
Cash! If you don’t want to worry about credit scores or credit reports, learn how to budget your money and start putting money away for purchases of things that you want. If you can build your bank account, you’ll find that you can pay for most things you need, and for those things that you end up not having enough money for, you’ll find that if you can contribute in some fashion to it that you’ll get what you need to get things taken care of.
I said this in the past, and I will repeat it now: don’t allow yourself to be a victim to credit scores. Take back your power, and be in control of your own finances.