The Great Irony

Credit is important. But how important? For years people with bad credit have been trying to improve it. And for years people with great credit try to protect it. The theory is that you want a great credit score when you go to borrow money for a major purchase. But the protection of one's credit rating has been bastardized into a really unhealthy thing.

I am not a proponent of bankruptcy, but not because it ruins your credit. I believe that every person should pay the debts that they have incurred. And bankruptcy often leads to stiffing your creditors. The reality is that having your credit ruined by a bankruptcy is a good thing. Why should someone who bails on their obligations still be able to obtain credit? I believe in second chances, but the second chances are often given well before bankruptcy.

One of my biggest pet peeves is someone in a terrible financial situation that constantly refers to how great their credit is. It's the equivalent of weighing 600 lbs and having low cholesterol. We are in one of the most challenging times in our nation's financial history. Your credit score is important, but not why you think. Yes, it allows you to borrow money for major purchases, but it really means that you have been financially responsible.

Take care of your debts diligently over the next 6 months. It will be vital to your financial survival. I say this with grave seriousness.