Almost every day an individual struggling with paying their debts responds with the phrase “I have a great credit score” and they are concerned about the impacts that dealing with their debts will have on their credit score.
These three digit scores and their underlying ratings are designed to distinguish those who have mediocre credit (and should get higher interest rates and worse terms) from those with great credit (who should get preferred rates and the best possible terms).
What your credit score really says
What a credit score really tells a lender is not whether you can pay back the debt. It tells them if you can make minimum payments on that debt. Individuals can owe money that they will never be in a position to pay, however because they are making the minimum payment on these debts, an R1 rating of “paid as agreed” means a good credit score. The struggle is that this is only one part of the puzzle.
Stop focusing on your credit score alone
Dealing with your debts today may have an impact on your credit in the short term (depending on your approach), but you’ll:
- Be on the road to being debt-free- knowing you will owe nothing after a period of time
- free up cash in your monthly budget by removing minimum payments that aren’t actually reducing your debt
- rely less on your credit, making your interest rate and credit score less important
- stop borrowing from Peter to pay Paul
If you’re tired of just maintaining the minimum payments on your debt and never getting ahead or are unhappy with the rate your debt is being paid, contact our office today to address your accumulated debt for good.