Welcome to The Finance Gym Action Plan for a Better Life with Money video series.
My name is Stacey Powell and if you’re ready to not just know better but do better with your money, then you’ve come to the right place and today we’re going to be talking about your credit score.
Today’s video, it’s actually really just meant for the people who are so strangled by the debt in their life that it’s time to take some drastic measures.
Credit scores are important. They’re absolutely important. You not only need them to get good interest rates when you buy a home. Sometimes you need them when you’re going to be renting an apartment or taking a lease out for a commercial building space or for some people, when you’re trying to get a job or government clearance or something. Credit scores are important. What I’m going to talk about today is when credit scores aren’t important, when you become more important than your credit score.
So I’m going to do a little play today about a conversation that I had with a client once and I’ve had many similar conversations but here is the way it went.
She came in. She was like under water. She was drowning in credit card debt. She couldn’t pay them and she didn’t know what to do.
Her solution up to the point of coming to see me was take more credit card debt out to pay the credit cards because she could. She had this great credit score. It was like how – it was close to 800. It was really a good credit score and she was not going to give that thing up. So here’s the way this went.
“Well, what would it look like if you stopped paying your credit cards?”
“Oh my gosh. I couldn’t do that.”
“Why couldn’t you do that?”
“Well, because if I stopped paying my credit cards, then I couldn’t get more credit to pay my credit cards.”
“Well, what would happen if you stopped paying your credit cards?”
“My credit score.”
“What do you need your credit score for?”
“To get more credit.”
Back and forth and back and forth. I kid you not and it took some time to – for me to teach her, for her to step back and really realize that she was in a loop that there was no solution to.
In the end, her solution was to stop paying her credit cards for a while and like I said in the beginning, this is really for those of you that are really just in the most dire circumstances. I don’t take this lightly but for some people, this is the right solution. When you’re so strangled and worried about your credit score, that you’re making crazy decisions and digging yourself a bigger hole because you’re trying to keep that credit score alive, well, then it’s time to give your credit score up for a while. It will rebuild. I promise it will rebuild. It rebuilds after bankruptcy. It rebuilds after short sales. It rebuilds after periods of not paying your credit cards.
With integrity, you want to circle back and get all that stuff done and you want to rebuild it. But if you’re really to the point where you’re struggling to that level, I suggest you get my book and read it and I talk a lot more in detail about this. It’s another one of those things that you probably don’t want to do alone. I would love it if you would come join us over at Team Do Better. There’s a group of us that will support you on your mission. You can also sign up for our newsletter at TheFinanceGym.com or subscribe to our videos right here on YouTube. Thanks for watching!