The American Dream of working hard and becoming successful is far from dead, even if people seem to be having a harder go at it than in previous decades. While there are many jobs for specialized workers available right now, many of those who would have worked in blue collar fields a generation ago are finding themselves underemployed.
However, becoming wealthy has never been only about income. Income certainly helps, but it is only one of several factors that go into the question of whether or not an individual will go on to be wealthy one day. As important or more than income is personal credit. Even people who have very limited financial means might use a Creditfix Trust Deed to get out of debt without resorting to bankruptcy, in order to save their credit history from 7 years of bankruptcy penalties.
Why would someone do this?
Well, it’s all because while income has to do with what you can do with your own money, personal credit is about what you can do with other people’s money. No man is an island, especially in the realm of personal finance. Very few people are able to get ahead in life from their income alone. Most will need to borrow money to do things like get a better education or buy a home. Both of these are examples of expensive actions which nonetheless help create much greater wealth for the individual in the long term. However, they might not be available to someone with bad credit, even if that individual has decent income.
And why is that?
You see, the lenders of the world don’t know you personally. And if you walk into a bank and try to make a good impression when asking for a loan from a banker, that banker is not going to try to make a gut decision about whether or not you’re the sort of person who should be given money. Instead, lenders look at cold hard facts. These facts are recorded in your credit history, which is kept by three different credit reporting agencies.
If you have a credit card but always pay your balance, always pay your utility bills on time, don’t carry much debt, and generally behave like a responsible person at least as far as your wallet is concerned, you will probably have a good credit history and credit score. This is a signal to lenders that if they were to lend you money, they would almost surely get it back.
But if you have a bad credit score, this indicates a record of instances when you were not responsible with borrowed money, and lenders will be loathe to give you some of theirs. As a result, even if you have good income, you may not be able to get a mortgage loan for a house, and the equity that comes with it. You may also not be able to get good student loans or go to the university of your choice, thus limiting your future earning potential.
For all of these reasons, it’s very difficult to gain wealth without good credit. It can be done, but it’ll take much more work and luck. Why not save yourself the hassle and work to build a good credit history instead?