Myth: I will never have another credit card again! I don’t want or need to rebuild my credit.
Fact: Your credit does more for you than allow you to incur debt. Although rebuilding credit for that purpose is enough of a reason if you ever hope to buy a home or new car. But let’s pretend for a moment that you are willing to live in an apartment for the rest of your life and buy beaters with cash, just to avoid going into debt again. Your credit score is used by more than just lenders, such as prospective employers, insurance underwriters, and prospective landlords.
In a nutshell, you need to be concerned with your credit score (and more importantly, rebuilding your credit score), because it will impact many areas of your life.Credit cards might not be the best way to rebuild credit, but it is faulty logic to believe that credit cards are – in and of themselves – bad. They are not. Credit cards can be very useful tools, if used properly.The problem is that too many people use credit cards and loans as a means of supplementing their income. For example, Bob earns $2k per month, spends $3k/mo, and supplements his income by taking out $1k loans each month. Bob is living beyond his means. The proper way for Bob to handle his finances is to either scale back his expenses, find ways to increase his income, or a combination of both.Credit cards are best used as a means of a temporary advance. Bob spends $2k/mo, and Bob earns $2k/mo, but Bob doesn’t have $2k right this second. He needs to make a purchase, and will have the money to cover the purchase on a later date. He puts the purchase on a credit card, and promptly squares his bill when the statement comes in.Of course, budgeting (leaning how to scale back expenses as necessary) and determining what expenses are necessities and what expenses are optional is a whole other topic. As an experienced bankruptcy attorney, I can help make suggestions for improvements to your budget so that you only have to go through bankruptcy once, and can avoid having to do it again in the future.
If you’d like to schedule a free consultation to determine what we can do for you, give my office a call at (920) 490-6160.