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There is a fairy tale that a good credit score will get you a better life.

Fairy tales are not the way to make adult decisions.

We know that most fairy tales are fables designed to teach children a healthy respect for rules and society’s expectation.  Some fairy tales were written to scare children to stay away from “bad places”, while others teach children to trust their common sense.

Is there truth behind the fairy tale that a good credit report will open the door to a better home (therefore better schools) and a better job?  To some extent the answer is ‘yes’, but for the most part that is false advertising promoted by creditors, banks and, sometimes, our government.  Their goal is to have everyone spend more money which equals higher profits, growth for the creditor and more taxes for the government.

Trying to get a good credit score can be like kissing a frog.

Is getting a good credit score like kissing a frog?

Where most of us go wrong is assuming that taking on debt will automatically lead to an increase credit score.  You have to pay the debt in order for the credit score to improve.  If life happens (you lose your job, are injured or divorced) it will mean you cannot pay the new debt which will automatically mean your credit score will be lowered.  A lower credit score equals (1) higher interest rate for EVERYTHING (house, car and credit cards), (2) your insurance costs will increase, (3) you will have a harder time finding a place to live in a good neighborhood (good neighborhoods usually  mean good schools), (4) harder to find or keep a good job (jobs now use credit scores as part of hiring or retaining employees), (5) plus so much more than I can cover here.

The point: Credit scores are important, but NEVER take out debt for the sole purpose of increasing your credit score.

Now if you are a multi-millionaire then you rarely worry about paying debts, but the rest of us live in the real world and must be concerned about feeding our families and getting to work in a dependable vehicle.

Why do so many believe that a credit score is a way of gauging their self-worth?

One woman refers to her credit score as “the most important thing in my life, right now, well besides my babies,” as “that darned thing is destroying my life,” and as “my ticket to good neighborhoods and good schools for my kids.”

Where I am coming up with all this?  Thirty, plus years of working in the bankruptcy world has opened my eyes to the abuses suffered on the young, lower and middle class by the business and banking worlds.  I suggest you read Duke Law Professor Sara Sternberg Greene’s paper The Bootstrap Trap.  This paper has some great insights about the problems that arise when low-income households try to live the life they see portrayed on TV and in romance novels.

Debt relief scams, pay day loans, title loans and most student loans are NEVER a way to help stabilize your income and protect your future. Until we learn how to control our finances (no you do not need the latest I-Phone), how are we going to teach our children?  Please stop letting TV ads dictate what you should buy and how you should live.  Trust yourself – USE YOUR COMMON SENSE.

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Diane L. Drain

Attorney, consumer advocate and retired law professor

About Diane Drain:

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about Arizona bankruptcy and foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

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