People who suffer cataclysmic financial troubles look for ways to improve their situation. Seeking advice and insight online and elsewhere is understandable. If you don’t know what to do, search out someone who does. Unfortunately, many resources present inaccurate information that can lead someone down the wrong path. Four particularly annoying myths about debt-free living do little more than cause confusion.
Myth #1 – You Need A Strong Credit Score to Buy a House
Bad credit lending is a cottage industry, and bad credit lenders don’t only offer credit card deals. Bad credit mortgage opportunities exist. Yes, these mortgages usually come with high interest rates. That’s the trade-off when seeking a loan with a low credit score.
Of course, you can take steps to improve your credit score by paying down debt and remaining timely on bill payments. You might consider putting off buying a home until your score improves.
Myth #2 – I’ll Just Pay Off My Balance Every Month
Paying off a credit card balance in full every month would certainly improve your credit score and cut down on interest payments. However, you need the cash to do so. No matter how many gurus tell you to pay off that card, you can’t zero out a $1,000 balance with $500 in your pocket.
Credit card borrowers commonly fool themselves into thinking they can pay balances off every month. Consequently, they charge away on the card thinking they’ll deal with everything in 30 days. Attitudes like this lead to amassing unnecessary and burdensome debt. Maybe the best strategy involves staying within your budget, paying cash, and forgetting about charging anything.
Myth #3 – You Can’t Rent a Car Without a Credit Card
You won’t be able to rent a car without putting a security deposit down. Credit cards represent one way to provide one. Debit cards represent another. Bear in mind that there may be additional rules and requirements for using a debit card. Generally, debit card users will need to be a certain age and need to have enough money in their bank account to cover the deposit. As long as you meet the rental company’s requirements, a debit card should be fine.
Myth #4 – Small Improvements Aren’t Worth Much
Slowly going from a bad credit score to a fair one is progress. So is reducing debt from $20,000 to $18,000. Don’t downplay any level of improvement. A steady, long-term path to being debt free delivers better results than maintaining the cycle of debt. Take pride in any improvements you make. Stay on the right track.
Avoid feeling discouraged if you fell for myths and inaccurate advice. See the past as a learning experience, and keeping moving forward in a better direction.
If you need financial help, schedule an appointment today!