Credit scores are a useful tool, and certainly have an important role to play in the granting and pricing of loans and credit.\u00a0 But sometimes, getting new credit isn\u2019t really the goal.\u00a0 For people whose primary objective, at least in the short-term, is to pay down debt or even just to get through the month at all, fears about whether some action or another will \u201churt\u201d one\u2019s credit score aren\u2019t helpful.\u00a0 It\u2019s unnecessary stress.\u00a0 This kind of thinking can lead people to spend the little money they have on endless interest payments rather than basic needs.\u00a0 Instead, I remind my clients to keep perspective about what a credit score can do, and what it can\u2019t.\u00a0 Good credit can help you get a mortgage, and it can get you a better rate on your credit card, but there\u2019s a lot more to life.\u00a0 Even the best credit score can\u2019t feed your kids.<\/p>\n
If you\u2019re struggling just to get by, or you\u2019re working hard to pay off debt, getting well-priced access to credit probably isn\u2019t in high on your list of urgent needs.\u00a0 Sometimes, the smartest short-term decision is to make a clear list of your priorities \u2013 as in, #1: food, #2: shelter, #3: clothing \u2013 and realize that \u201cimproving my credit score\u201d is actually pretty far down that list.\u00a0 It can be a really freeing exercise, especially if you\u2019re living with the burden of heavy debt.<\/p>\n
It may mean you have to learn to ignore collectors\u2019 calls, but I also remind my clients that, at least in Ontario,\u00a0there are limits on what a collector can do<\/a><\/span>.\u00a0 Indeed, collectors like to remind debtors that by not paying the debts in full right away they risk damage to their credit score, but I often remind my clients to ask themselves, \u201cso what?\u201d\u00a0 So what if my already-damaged credit score stays a bit lower than I\u2019d like for a while? Remember, it\u2019s never too late to start re-building your credit, even if you\u2019ve neglected it for a while.\u00a0 Sometimes that\u2019s a good short-term decision.<\/p>\n I certainly understand wanting to have \u201cgood\u201d credit, and I know most people really want to pay back whatever they owe.\u00a0 It\u2019s a goal I encourage and applaud.\u00a0 But for people who are currently mired in debt, or living on extremely limited means, it may just be a goal that\u2019ll need to wait.<\/p>\n","protected":false},"excerpt":{"rendered":" Credit scores are a useful tool, and certainly have an important role to play in the granting and pricing of loans and credit.\u00a0 But sometimes, getting new credit isn\u2019t really the goal.\u00a0 For people whose primary objective, at least in the short-term, is to pay down debt or even just to get through the month … Continue reading »<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[8,9],"class_list":["post-36","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-canada","tag-financial-literacy"],"_links":{"self":[{"href":"http:\/\/blog.magil.org\/index.php?rest_route=\/wp\/v2\/posts\/36","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/blog.magil.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.magil.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.magil.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.magil.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36"}],"version-history":[{"count":3,"href":"http:\/\/blog.magil.org\/index.php?rest_route=\/wp\/v2\/posts\/36\/revisions"}],"predecessor-version":[{"id":39,"href":"http:\/\/blog.magil.org\/index.php?rest_route=\/wp\/v2\/posts\/36\/revisions\/39"}],"wp:attachment":[{"href":"http:\/\/blog.magil.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.magil.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.magil.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}