Driving home this afternoon I was behind a small SUV that had an advertisement for a “credit repair” firm on the back.  And that was specifically what the sign said:

Get the “Good CREDIT” you DESERVE

And as I drove along, I was thinking about that… it brought up a point:

Do you DESERVE good credit?

Is good credit some sort of right?  I know people with incredible credit.  I know people with lousy credit.  I have had both.  I know that when I had lousy credit, I deserved it.  When I had good credit, I earned it.  And that is the basic argument I have with that sign.  Good credit is not deserved, it is EARNED! Freedom is deserved.  Equal opportunity to succeed is deserved.

And then I started looking at the sign a little deeper… and knowing a little bit about how many “credit repair” companies operate, I wasn’t surprised that there were quotes around “Good CREDIT”.  Maybe they didn’t mean the credit that we all think of… the ability to get favorable mortgage rates or credit cards.

But the biggie is still that deserve.  So, if you want to deserve good credit, here is what you do:

  • Pay all of your bills on time.
  • Keep paying all of your bills on time.
  • Don’t freak out when you get a new credit card (or credit line) and max it out.  Keep balances low.
  • DO have a couple of credit cards, and use them occasionally.
  • Don’t bother with “Store Cards” or private lines of credit.
  • Keep paying all of your bills on time.
  • When you are buying a house, get a 15 or 30 year fixed rate loan… and base what you buy on what you can pay each month… not on what you get approved for.
  • When buying a car, don’t finance it for more than 5 years… or even 3 years if you can pull that off.  If you can’t get the payment you want with a 60 month loan or less, you need to think about a cheaper car.

I have broken EVERY single one of those rules at some point or another… and I paid the price for it.  When I wasn’t following the rules, I got the BAD CREDIT I deserved.  As I changed my habits, my credit also changed.

And with that comes responsibility.  My wife and I can easily go out and get into trouble… we have built that level of trust with creditors.  And we will keep that trust until we abuse it.

I would LOVE for you to get good credit, and then use it for great purposes… buying a home, starting a business, rewarding yourself with a cool toy (car, boat, baseball card… whatever).

If you are in the market for a home, and you are wondering about your credit and what you should do, contact a GOOD mortgage broker.  Do that before you look at homes.  In fact, you might do that before you even talk to a real estate agent.  And if your credit IS a bit challenged, DON’T immediately jump on the exotic loan train.  Think about delaying gratification for a little while and building a better foundation.