Don’t be afraid of your (bad) credit score!

One of the biggest mistakes that people in financial trouble make is to be too focused on their credit score and how bad it is (or how bad it will be if they don’t settle with that collection agency right now).

Years ago there were no credit scores. And then for a while there were, but no one really knew about them. Because no one knew about them, no one really worried about them either.

But gradually word got around, and now in 2010, every breathing American seems to check his or her credit report and can tell you their credit score more readily than the Red Sox score.

The big financial companies feed into this, and calculate a fear of a bad score into the general population of consumers. Before long people have the idea that one’s life and worth is wrapped up in that credit score, which is something we don’t fully understand, and based on credit reports which are notoriously inaccurate. Life will end, we’re told, if our credit score declines.

That fear keeps American consumers struggling to pay debt that they can never, in this life or the next, repay. They appear to consider a lifetime of minimum payments rather than a fresh start in bankruptcy to preserve their credit score.

And that is a shame, because in most cases, a fresh start with bankruptcy is far superior to a life of shame and fear spent worrying about some nebulous score.

Bankruptcy is all about fixing your balance sheet so you can start over. Then you can get rid of dischargeable debts. Save for retirement. Live beneath your means.

Decide to give yourself a debt-free future. Don’t walk the financial tightrope!

 

By Doug Beaton

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