When I was younger, I did a bunch of stupid things with credit. When I found out, for example, that I could buy a complete Sears Craftsman Toolset in a really neat Craftsman metal toolbox, and it would only cost me $12/month on "revolving credit", I was ecstatic! It was a $129 tool collection of "over 300 tools" (each socket, allen wrench, drill bit, screw bit, etc. counted as 'a separate tool' ) and I actually used the tools a LOT.
All kidding aside, because I paid the minimum payment each month before finally wising up, that $129 toolbox probably ended up costing me close to $1,000. And, since you actually had to WRITE CHECKS back then (or show up at the store's service desk with cash) I managed to miss a few payments here and there.
On top of this, I experienced a period of very bad health, and doctor bills came in, and I wasn't so good at paying them off. More hits to my "credit report". Before long, I had amassed debt in small amounts here and there - new tires for "only $14 a month", $15 a month to Montgomery Ward, $11 a month for a handgun I really really needed.... and I was in deep financial trouble.
When I was about 20 or 22 years old, we had one of those "Debt Free" seminars at our Church. I became convicted that my 'bad credit' was, in fact, a 'bad testimony', and I decided to do something about it. Today, my credit score hovers around 835-840, with 850 being considered "the very top".
Since then, I have enjoyed helping friends and family figure out, and reduce, debt, and improve their credit scores.
I don't pretend to know all the inner workings of how the scores are compiled, but I do know several factors that make sense whether you care about "the score" or not.
A) Always pay your debts on time -- missed payments or late payments hurt a lot
2) "Income to Debt" ratios - it makes sense that a certain percentage of your income would go to housing, food, transportation, etc...
C) Percentage of "credit limit" you have "tied up" (if you owe $500 on a credit limit of $1,000, that's a whole lot worse than owing $500 on a credit limit of $50,000)
D) AGE of debt -- if you have "good credit" over the past 20 years, that's better than having "good credit" over the past 12 months
There are other factors, of course, but it comes down to just good common sense. If you agree to pay $(X) for (Y)item over (Z)term, do it!
Better yet, pay cash if you can afford it.
But I like "FREE STUFF". Because of my good credit, and the fact that I keep a certain minimum amount of money in my bank, I get some pretty neat perks on my credit card - like FREE extended warranties on stuff I buy, free AIRMILES (which I use a lot), free insurance on rental cars, free concierge services, free "extra bag" on flights, priority boarding, and all kinds of fun stuff.
That takes DISCIPLINE -- they (the banks / card issuers) are COUNTING on you missing a payment so they can suddenly raise your interest rate (I don't pay interest because I pay my credit cards off in full each month) or cancel your card, or cancel your perks.
Anyway, what's your financial journey been like?
All kidding aside, because I paid the minimum payment each month before finally wising up, that $129 toolbox probably ended up costing me close to $1,000. And, since you actually had to WRITE CHECKS back then (or show up at the store's service desk with cash) I managed to miss a few payments here and there.
On top of this, I experienced a period of very bad health, and doctor bills came in, and I wasn't so good at paying them off. More hits to my "credit report". Before long, I had amassed debt in small amounts here and there - new tires for "only $14 a month", $15 a month to Montgomery Ward, $11 a month for a handgun I really really needed.... and I was in deep financial trouble.
When I was about 20 or 22 years old, we had one of those "Debt Free" seminars at our Church. I became convicted that my 'bad credit' was, in fact, a 'bad testimony', and I decided to do something about it. Today, my credit score hovers around 835-840, with 850 being considered "the very top".
Since then, I have enjoyed helping friends and family figure out, and reduce, debt, and improve their credit scores.
I don't pretend to know all the inner workings of how the scores are compiled, but I do know several factors that make sense whether you care about "the score" or not.
A) Always pay your debts on time -- missed payments or late payments hurt a lot
2) "Income to Debt" ratios - it makes sense that a certain percentage of your income would go to housing, food, transportation, etc...
C) Percentage of "credit limit" you have "tied up" (if you owe $500 on a credit limit of $1,000, that's a whole lot worse than owing $500 on a credit limit of $50,000)
D) AGE of debt -- if you have "good credit" over the past 20 years, that's better than having "good credit" over the past 12 months
There are other factors, of course, but it comes down to just good common sense. If you agree to pay $(X) for (Y)item over (Z)term, do it!
Better yet, pay cash if you can afford it.
But I like "FREE STUFF". Because of my good credit, and the fact that I keep a certain minimum amount of money in my bank, I get some pretty neat perks on my credit card - like FREE extended warranties on stuff I buy, free AIRMILES (which I use a lot), free insurance on rental cars, free concierge services, free "extra bag" on flights, priority boarding, and all kinds of fun stuff.
That takes DISCIPLINE -- they (the banks / card issuers) are COUNTING on you missing a payment so they can suddenly raise your interest rate (I don't pay interest because I pay my credit cards off in full each month) or cancel your card, or cancel your perks.
Anyway, what's your financial journey been like?
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