One of the Christmas movies I enjoy watching is An American Christmas Carol. The Scrooge person is played by Henry Winkler (remember The Fonz?). He doesn’t seem like a likely Scrooge does he? In this American Christmas Carol, we find ourselves in America in the late 1800s and Scrooge discovers credit. He takes this newly developing business that banks and companies have come up with where you let people buy items on credit and charge them interest. And if they don’t make their payments, the lender gets to take the item! He makes the comment that “It is not unheard of to get 150% of the original price or more”.
Now, I am not sure who first invented the idea of credit, particularly where interest and repossession are involved. There is mention of loans in the bible, but there is also the fact that every seven years, debts were to be forgiven (and my guess is that is where the 7 years comes from regarding how long a bankruptcy can be listed on your credit report). Fortunately, we are past the point where we get thrown into debtor’s prison. Can you imagine…you are in debt so they throw you in prison (where you can’t make a living) and there you stay until your debt is paid. How many of us would be in jail now if this was still the practice?
We have become a nation of people that live on credit. We use credit in emergencies and we use credit to finance our latest want list. There are people who never run into credit problems. They always pay on time, they never spend more than they can repay, and they don’t run into situations where their credit starts ruling their lives. In my early credit life, I only used a credit card to build up my credit. I paid the balance each month and was on top of things.
However, this doesn’t always work out for people. And I have been there. We have had times when the credit card was the only thing that kept food on the table and gas in the car. I think there are many more of us who have found ourselves in that situation. And it is not always brought on by poor choices, indeed it is often brought on by the lack of job security in the modern world. Whereas people used to get a job and stay in it for decades, now most people stay at a job for 3-5 years before moving on.
Did you know that whenever you miss a payment, even just one, it gets reported on your credit report? Did you know that if you miss a payment on credit card A and credit card B finds out about it, they can raise your rates? Are you aware that on some credit cards you are paying as much as 30% interest? When was the last time you really looked at your credit card bill to figure out how much interest you are paying?
Don’t despair though. Just like everything else in the world, when a problem exists, someone else comes along with a way to fix it. Have you ever checked out a credit repair service? Their job is to help you with credit repair. And many of these credit repair services are free of charge to you. They receive their money from the credit card companies. The credit card companies pay them to help them get people’s debts straightened out. And you can save literally thousands of dollars by trying to repair credit scores.
For instance, say your interest rate goes up 1%, just 1% (and let me tell you if you have been delinquent in paying, chances are that it has gone up way more than that). And then say you want to get a home loan for $100,000. Well, that extra 1% can cost you $25,000 over thirty years! Take charge of your credit (sorry for the pun). Get your scores improved and if possible throw away the dang things! Personally, I advise keeping one for emergencies (and no I am not referring to a great sale on Jimmy Choo shoes). Some people even go as far as putting that emergency card on ice in the freezer to help keep them from using it unwisely. With a little help and some smart decisions on your part, you can save money by repairing your credit score.