Better Not to Be in Debt Than Having Excellent Credit
Of course, your credit rating is important, mainly because bad credit can make your life difficult . However, as the author of articles on personal finance J. Mani notes, it is easy to overlook what is even more important than solid credit: no debt.
A couple of recent polls, such as this one from Bankrate , show that Gen Y tends to avoid credit cards and other debt more than the older generation. Experts believe that this is probably due to our post-crisis economy. Student debt levels, for example, are insane, which makes millennials fearful of debt. As a rule, getting out of debt is a smart financial move. The problem is that smart financial moves are not always smart lending moves because of the complex and mysterious credit rating system. But J. Money notes well: you do not want to risk and ruin your finances just for the sake of increasing credit.
On the Budgets Are Sexy website, he writes:
[Millennials] are smarter than most adults! Who cares about the reward if you’re going to end up digging in a hole and paying more for that privilege. The game “Better in terms of budget” works only for those who already trust themselves and plastic, by the way – not for those who do not. We all need to be careful with our spending as financial security trumps credit all day, every day. You also can’t discount the enormity of what debt can do for a person, especially those who have made it clear how nervous they are (and rightfully so!).
Yes, you want to have a decent reputation. And yes, you want to know how credit works. Plus, of course, credit cards can be fun for rewards !
But if you are afraid to use a loan because you know that you are probably in debt, the reward will not be worth it, and your loan will still suffer. Good money habits are more important than a great credit score, which doesn’t open any magic doors . And there are many ways to lend responsibly if you are afraid of debt. Read the rest of James Money’s tirade at the link below.
Debt Avoiding Is More Important Than Your Credit Score! | Budgets are sexy