Are you controlling credit or is it controlling you?

Your worthiness is not dependent on what other people think of you. Remember that when you enter the credit world. We are all so hung up on our “credit rating”, which essentially is a system set up to guage your “credit worthiness”.  It may, or may not, reflect how trustworthy you are with credit.

Consider, for example, someone who has never used credit. They lived within their means. They didn’t feel the need to go into debt, not even for a home or car. They paid cash for everything and if they didn’t have cash, they did without. (Mind boggling, I know!)Loan app - pending

From a ‘credit rating’ perspective, they would be considered high risk. Why? Because they never proved if they were responsible credit users.

Isn’t that la title like saying you can’t possibly be a good parent because you never had kids? Or you can’t possibly be a good salesman because you never had a sales job? Kind of reminds me of the “guilty until proven innocent approach”.

Now, consider the person, who, in their mid-forties, has a mortgage, a second mortgage, a car loan, three credit cards and a line of credit. They have managed to keep everything up to date, not because of great money management skills but because they have done a tremendous job juggling from one credit account to another over the years, refinancing and paying off when they could, only to incur new debt to have more ‘stuff”.  From a credit perspective, they have an excellent credit score and are considered a good credit risk. Hmmmm…really?

Who would you lend your money to? I rest my case!

My point is, that the lending  system, like many systems reliant on external acceptance, is flawed.  At the end of the day, you need to look a little deeper and ask yourself, “Is credit controlling me?”, or “Am I controlling credit?”. How can you tell? I’m glad you asked! (even if you didn’t I am going to tell you) 🙂 …

  • approved - deniedIf you rely on credit to get you through payday to payday or use credit as your emergency fund, it is controlling you.
  • If you carry a balance on your credit accounts and pay interest, it is controlling you.
  • If you pay the minimum payments only it OWNS you!

On the other hand…

  • if you finance the least amount possible, pay it off as quickly as possible, or pay off your credit card balances in full before credit in accrued, you are controlling it. Somewhat.
  • If you use credit to make more money than you pay in interest, you are controlling it.
  • And finally, if you do not use credit at all, you are in TOTAL CONTROL.

So the next time you think about applying for credit, ask yourself, “who’s in the driver’s seat here?” and really reflect on who’s winning in the end.

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Happy Finances!

mam sig

Mary Ann Marriott
aka Dr. Debt

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