Chains of Debt And how to break them

Turn the chains of debt into your greatest ally with good credit.

Smaller Interest Rates: With good credit, banks and lenders will charge you less interest (that's extra money you have to pay back!) on your loans.

Lower Limits: Lenders are willing to loan people with excellent credit a lot more money at once. This can be good for starting a business, buying a better car, or getting yourself out of a jam!

Reward Points: People with excellent credit are more eligible for reward programs that give cash back, air miles, or bonus cash just for signing up!

Easier Rent: Landlords are often more willing to rent out their apartments to people with excellent credit.

Cheaper Insurance: Many insurance companies believe that people with excellent credit are less likely to file a claim. This means cheaper insurance for people with good credit scores!

The Bottom Line: For lenders, letting random people borrow money is quite the gamble. What if you default? People with higher credit scores are a smarter gamble because they're more likely to pay it back. You want to be a smart gamble.

TYPES of credit (pun intended).

Service Loans: Loans centered around utilities, such as gas, water, and electricity. If you keep up good credit, these usually don't have a down payment.

Cash Loans: Cash in hand, to be repaid back with interest later. These are often predatory and start a cycle of debt! It's usually best to steer clear of these.

Installment Loans: Loans with a down payment and a contract to pay them off over month-to-month or year-to-year installments. Use this for houses and cars.

Credit Cards: A card that allows you to make daily purchases by incurring debt for each of them. This is NOT your money - it must be paid back!!!

Credit Gone Wrong
  • Foreclosure: Buy a bigger mortgage than you can pay, and you can find you and your family out on the street - with every potential renter having access to your abysmal credit score. Before you can buy a house, make sure you can afford it.

Waiting Too Long: If you're in your 30's and still don't have credit you're kind of screwed. No credit is even worse than bad credit.

DON'T BE A LIABILITY. Start building credit ASAP.

Maxing Out: Maxed out credit cards = low credit score. Always spend beneath your means, and you won't have your access to necessary loans cut off.

Student Loans: If you can't afford to go to college, you probably shouldn't go, honestly. You're as valuable as a creditor says you are and no more. If you still want to go to college, consider moving abroad.

If for some godawful reason you incur debt anyway, try to go for subsidized loans and pick a college that gives you a lot of scholarship money. Scoring high on the SAT can help in this endeavor.

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