Your credit score rating is furnished by credit rating agencies such as Equifax, Experian and TransUnion and is used by lenders to determine whether you are credit worthy or not.
Such ratings are based on a point-accumulation system, wherein points are added for every positive credit transaction on your part and deducted for every negative credit transaction.
"The man who never has money enough to pay his debts
has too much of something else."
- James H. Aughey |
For example, points will be added every time you pay your installments on time and vice-versa. In order to receive the best rates and options, you will be required to have a score of 750 to 850.
Maintaining such high scores is necessary because lenders prefer doing business with people having a good credit score rating, rather than with people having bad ratings. Moreover, you will also be in a much better position to negotiate your credit limit and interest rates if you have a higher rating.
Maintaining a good credit score rating is very important, IF you use credit, especially if your sole aim is to increase your credit limit and attract low interest rates on your present and future loans.
However, we do not recommend you go out of your way to building a high credit score rating because the only way to do it is to take on more credit. Using credit can quickly get out of hand.
For more and more American consumers, credit has become an addiction. We believe that eliminating the source of the addiction is the best treatment for any addiction.
This is why, instead of preaching the virtues of a high credit score rating, it is recommended that you stop all your credit transactions, right here and now, before it is too late.
Credit ratings are important only when you are utilizing credit. Once you completely give up the option of using credit, you will no longer be bound by it. It really is that simple.
To take care of your existing debts, you need to classify your loans and credits based on the balance remaining in each of these individual loan accounts. You can then start with paying the accounts that have the least balances and then move on to eliminate the bigger loans.
By eliminating the smaller loans first, you will get a psychological boost, which in turn will keep you motivated until such time as the last of your debts is completely paid off.
“But what if I need extra funds in future, will I not be required to use credit then?” you might say?
This is a common query and worry. It is quite obvious that we all feel the need for additional funds other than that available from our current earnings. Sometimes we feel as if we have no other option but to use credit. However, it is not recommended that you apply for another loan or creditcard.
It is better to wait, save for what you want to buy, then pay cash when you’ve saved the amount required. Yes it takes longer, but the personal and financial rewards of using the disciplined approach is well worth the wait. With this approach who will never be concerned about your credit score rating, ever again.
While you are saving, make efforts to increase your income! For example you can ask for a raise, look for better job prospects, do additional jobs in your spare time or start your own home-based business.
For quick cash, hold a yard or garage sell, begin selling items on ebay. There really are countless ways to come up with the money you long for.
The overriding message here is to do whatever needs to be done to increase your earnings, but never ever apply for credit. Your credit score rating should not define you, ever.
So, if you really want to feel free from all the tension and stress of making payments on time and dealing with collectors, take up the challenge of living a debt-free life, right here, right now.
"Do not accustom yourself to consider debt only as an inconvenience;
you will find it a calamity."
- Samuel Johnson |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
