Previous Page
People are told that they must protect their credit rating at all costs
and that their credit report is the most valuable piece of paper in
the world! Ring any bells? If you get some bad marks on your report,
that's it, you're in financial ruin. People do whatever it takes to
ensure their credit report is kept in what they believe to be perfect
condition, including working two or even three jobs and having a nonexistent
family life, all just to keep this electronic report, supposedly, in
good shape.
So what is a credit report?
A credit report is basically a record of your financial standing that
tells the creditors how much debt they can safely get you into.
The better your report, the more debt you're qualified to accumulate.
So what is that credit report going to be used for?
The only reasons for a credit report is so financial institutions can:
1) Estimate how much more money they could lend you and
2) as a whip to keep you anxiously making sure all your payments are
made on time for what you've already borrowed.
If you've got $30,000 in unsecured debt, what good has this report
done you? Well, it's allowed you to get $30,000 in debt. The better
your report is, the more debt and financial burden you can take on.
Having a good credit report sure makes sense for them!
The "best" way to get and keep a good credit report is borrow
money and continue to make on-time, minimum payments. Right? Many people
believe that the more they borrow, the better their report will be.
After all, if you don't use your credit, the banks won't raise your
credit limit. Keep making those payments on time and they will lend
you more money! Your credit report is all part of a carefully designed
trap to keep you borrowing more money.
One of the biggest lies put out by the creditors is that if you're
making regular monthly payments, you will have good credit.
This lie is put out to ensure that you continue making those regular
monthly payments, whether you have any money left over to eat or not.
The fact is that if you have a higher than 30% debt-to-income ratio,
your credit report probably already has some bad risk marks against
it. Don't believe me? Try applying for a some additional credit. If
you get turned down you have bad credit and a bad credit report, even
though you're making those regular monthly payments on time!
People get so caught up in making monthly payments that they never
look at what would happen if they cut the credit out of their lives.
Now there's a radical thought! If you're making monthly payments of
say $600 per month to the creditors, once you have become debt free,
you could save in the region $7,500 in the first year. If you had $7,500
in the bank would you need a credit card? But that's not the most amazing
thing about all this...
Next Page
4470 W. Sunset Blvd., Suite 216, Los Angeles, CA 90027
