MYTH 6: I must get out of financial trouble with zero negative marks on my credit history.

 

REALITY: Some people would sell their souls to have a stellar credit report. Why? If they have a negative mark on their credit report, would that prevent them from getting more unsecured credit? Maybe. Would that be so bad? Isn’t that how they got themselves into trouble in the first place?

 

Having a negative mark on your credit report does not mean you won’t be able to get credit. It won’t stop you from buying a house or car. Often, the most important factor in buying a home or car is not how spotless your credit is, but how much of a down payment you put down. Having a negative mark also does not mean you won’t be able to get a credit card. You can get a secured credit card, where you put down a deposit. There is less risk to the lender since he has the security of the deposit, and therefore, he is more lenient in his lending guidelines.

 

Many people who are always worried about their spotless credit records do something dangerous, such as taking out a home equity loan that they can’t afford to cover their debt payments, or taking a cash advance on their credit card(s) to make their monthly payments. All of this borrowing for what? Just so they won’t have a negative mark on their credit report? If you’re having a tough time, then do the best you can. If you fall a little behind, it’s possible you might have some problems with lenders in the future. However, you may send a 100-word statement to the credit bureau(s) explaining your situation. The statement will appear on your credit report, enabling future creditors to understand what happened to you and why you temporarily fell behind.

 

MYTH 7: I’m a loser and a failure because I’m in financial trouble.

 

REALITY: You have to accept responsibility for your actions and remember that you did accept the credit with the promise of paying it back. But most families and our schools do a poor job of teaching financial responsibility. How many classes did you take while growing up that taught you how much credit you should accept? Maybe the truth is that you did make a mistake and you got in over your head because you didn’t know better. If you can learn from this mistake, you are neither a loser nor a failure. Accept your setback, learn from it, and move on.

 

MYTH 8: My credit card company is taking advantage of me by charging 22% interest.

 

REALITY: Were you forced to get a credit card from that particular bank? If you were unaware of the interest rate before you completed the application, you should have inquired. By using the card, you accepted the bank terms, no matter what they were. If you don’t want to be charged a high interest rate, either don’t get the card or, when the bill comes, pay the entire balance within the grace period.