Not always is having bad credit such a bad thing. Here are some good things about having bad credit.
Can a bad credit score keep you from getting into bigger trouble? Hasn't it helped many young people do just that? I'll tell you a few true stories to show you how.
"Good Credit History Story"
My friend had a good credit score when he first became an adult. Soon, he could get credit cards whenever he wanted and also get loans for cars, snowmobiles, and other things. He made the payments, but he got more and more in debt as he did so. When he was 30, he owed more than $20,000 in loans for credit cards, cars, and business tools.
At some point, it was just too much. After thinking about going bankrupt, he was sure that if he threatened to do so, the credit card companies would lower the amount he owed them. But he couldn't keep paying on the credit cards or the companies wouldn't believe he was having money problems. He did this, and then he wrote the companies a nice letter explaining his situation. Most of them took at least 30% off of what he owed, but he had to pay off the rest right away. He did this with a home equity loan.
So, his bad credit score wasn't as bad as it would have been if he had gone bankrupt, and he was able to rebuild it. He also started to get his credit balances back up to normal. Because of his good credit score, he was able to start taking on more and more debt. At the very least, he has a hard life.
Story of a Bad Credit Score
Another friend's first credit score was based on the phone bill she never paid on time in her first apartment. In the end, it was cut off. This and a few other small credit mistakes she made when she was young hurt her credit scores. How has this affected her?
Well, she hasn't had the pleasure of being in so much debt that she was close to filing for bankruptcy because she can't borrow. She has to pay cash when she wants to buy something or wait until she has saved enough. Has the fact that she can't keep a bunch of things that aren't worth as much as what she owes on them made her less happy? I don't believe that. She seems happier than most people, maybe because she doesn't have the stress of debt that most people have these days.
Is it true that bad credit is good?
I'm not saying you should try to have bad credit on purpose, but if you already have one, you should know that it's not all bad. If you could borrow more money, the same bad habits that got you here could get you into even more trouble. Why not see it as a chance to stop getting deeper into debt and start doing things better?
Pay for everything in cash. Pay down the balances on your credit cards and loans (the higher interest ones first). As soon as you pay off your credit cards, start saving money so you can buy a good used car with cash. Then, once you've done that, start putting what would have been a car payment into a savings account for a future down payment on a house or a business (the only things you should borrow for). Yes, a bad credit score can be good if you learn from it and use it as a chance.
