This is a dangerous financial strategy, for a number of reasons:
- As a professional in the insolvency industry for over 15 years, I see many people who have a good credit rating, but cannot obtain new credit due to debt/equity ratios, unemployment or a number of other variables.
- I also see many people who have a good credit rating, but are not able to move forward financially due to the fact that they are only funding interest (or a small amount of the principal borrowed) and are not putting away money for the future.
- Many people who are experiencing collection calls and/or collection notices have bad debt showing on their credit reports. They are under the misunderstanding that by filing for protection under a Bankruptcy or Consumer Proposal they will further damage that credit rating. The truth? A filing will NOT make their credit history any worse. In reality, a filing will, instead, help them rebuild clean credit faster and erase old credit much easier.
So why do so many of us keep bashing ourselves over the head with this myth of the need for a perfect credit rating? Why do we struggle to make ends meet, while trying to preserve a credit rating (or avoiding seeking creditor protection through a Bankruptcy or Consumer Proposal)?
My recommendation to anyone reading this blog:
It is far better to have a negative credit rating with savings in the bank, than a good credit rating with no savings in the bank.
At A. Farber & Partners, through our R-Plan strategy, we can help you rebuild yourself financially, by either helping you to eliminate your debt in a Personal Bankruptcy, or drastically reduce your debt by offering some formal protection under a Consumer or Division One Proposal.
Many people struggle for a very long time with debt. Each and every day you try to fund that growing debt load, is a day when money could potentially be saved towards your future instead. It is important for you to remember that a credit rating can be rebuilt rather quickly, but savings are very difficult to come by.
From my experience, too many of us are putting off saving for the future by trying to preserve that elusive goal of a perfect credit rating, a rating which during retirement will not help pay your monthly bills. Only money in the bank will help you achieve that goal.
Would you like to know how to get out of debt and retain a better credit rating? Contact us for a free debt consultation.