Top 3 Irrational Fears about Credit and Debt

Is credit bad?

Not really.

credit-cardMost people, however, fear credit and debt. Many don’t realize it, but such a mindset could end up hurting them financially in the end. There is nothing wrong with using credit to reach a goal in life, such as starting a business, getting a new home, or getting a college education.

Here are some of the most irrational and exaggerated fears about credit and debt:

Fear of Debt Itself

Many people rely on expensive debt—these are financial obligations that often come in the form of credit cards. They are expensive because most have around 17.32% in interest rates on average; all of which goes into meeting daily and monthly expenses. When you use a credit card to pay for everything, it’s likely that you will struggle with finances. suggests borrowing money from lenders when paying for specific services instead of using your credit card. Consider a personal loan with a fixed payment period, so that you won’t be tempted to stretch out your debt indefinitely.

Fear of Asking Creditors for Help

Another widespread but irrational fear is that asking a creditor for assistance in emergency situations will spark increased interest rates, suspension of charging privileges, or even a lawsuit. If you want to maximize your finances, put that fear behind you. Call your creditor right away as soon as you are having problems paying your bills. Most creditors will do their best to help you find a good solution, but you have to do your part by calling them as soon as possible.

Fear of the Effect of Credit Score on Future Job Opportunities

Federal law allows employers to look at a candidate’s credit report, but most employers do not have access to your credit score. Yes, your credit report and credit score are two different things. Your credit report, often used as part of your background check, is a document detailing your credit history. Checking this document helps employers prevent application fraud.

Your credit score, on the other hand, is usually for the eyes of lenders, landlords, and utility companies. This means having a poor credit score won’t prevent you from getting hired in the future.

You have to be proactive about managing your credit health, and you have to put these fears to rest as well. When you do, you can fully use credit to your advantage.