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Can a bad credit rating save you from bigger problems? Hasn’t it done just that for many young people? I will desribe it with some true stories.

Is It Good To Have A Good Credit Rating

My friend started his adult years with good credit. Soon he was able to get credit cards at will, as well as finance cars, snowmobiles and more. He made the payments, and get stuck into debt while he was at it. When he was thirty years old, he had over $20,000 in credit card debt, plus loans on cars and business tools.

He was overwhelmed with the debt. After considering bankruptcy, he was convinced that the credit card companies would reduce his balance due if he just threatened to declare bankruptcy. However, he had to stop paying on the cards, or the credit card companies wouldn’t believe he was in financial trouble. After doing this, he drafted a nice letter to the companies, explaining his condition. Most of the companies cut thirty percent off what he has to pay, but he had to pay the remaining money immediately, which he did with a home equity loan.

As a result he was able to rebuild his credit score as his bad credit rating was not as bad as if he had actually declared bankruptcy. He also started to building again his credit balances. His good credit rating enabled him to begin again the process of overburdening himself with debt. He lives a stressful life, to say the least.

Bad Credit Rating - A Good Thing

Another friend had her first credit score based on the phone bill in her first apartment, which she never paid on time. It was eventually disconnected. This, along with a few other minor credit infractions, destroyed her credit scores while she was young. What effect did it had on her?

Because of bad credit rating she was saved from the painful stress of paying debt. She has to buy things for cash when she has it, or wait until she saves enough. Has the inability to have a bunch of things around that are worth a fraction of what she owes on them made her less happy? No it is not like that.

She seems delighted than most people, perhaps partly because she just doesn’t have the debt-stress that is so typical today.

Sometimes Bad Credit Is Good?

I’m not saying you should intentionally try to get a bad credit rating, but if you already have one, know that it isn’t all bad. Your borrowing habits can trap you into more serious debt problems. Take it as an opportunity to stop going further into debt, and a chance to learn better habits?

Pay cash for everything. Your first priority should be to pay those outstanding balance having the higher interest. The moment you get your cards paid off, start setting aside money to buy a good used car for cash. then, when you’ve done that, start putting what would have been a car payment into a savings account, for a future down payment on house or a business (the only things you should borrow for). Your bad credit rating can be a good thing if you take it as a chance and learn a lesson from it.