In some instances, having bad credit rating can help a person, especially a young adult, avoid headaches in the future. The following stories can help you understand why.
The Man with Good Credit Rating
A friend of mine started off with good credit when he had his first stable job. His credit standing enabled him to get credit cards, including financing for his snowmobiles, car, and others. As he went along paying his debts, he got into more debts. By the age of 30, he had more than $20,000 debt in his credit card, excluding his car and business loans.
He considered declaring bankruptcy, hoping that the credit card companies will reduce his debts. To convince the companies that he was having financial problems, he stopped paying them for a while. After this step, he wrote a letter to the credit card companies, which in turn reduced his debts by almost 30%. A home equity loan helped him to pay his remaining debts.
In his story, his bad credit rating worked for him in a good way.
The Woman with Bad Credit Rating
I have another friend who made her telephone bill as a basis for her first credit rating. She never paid her obligation promptly so her phone was disconnected. This incident, together with other credit violations gave her an unfavorable credit rating at a young age.
Since she cannot borrow, she did not get into the habit of using credit to the extent of becoming almost bankrupt. Having no credit card, she purchases everything she needs using cash or saves enough money to afford them. As a result, she does not have to worry about debt-related stress that often plagues others.
Is Having Bad Credit Good?
I am not trying to imply that you should get a bad rating on purpose. The point I am trying to drive at is that if you already have an unfavorable rating, put in mind that this situation could still give you advantages. Just look at the situation as a stepping stone for you to avoid having more debts and to develop better habits.
Start paying purchases with cash, and pay card and loan debts little by little. When you are done paying with your debts and you have plans of buying a car, start saving money to buy a used car in cash. Once you have bought your car, place your future income in a savings account.
You can turn a bad credit rating into something positive if you look at things in a different perspective.