Bad credit scores are always bad news because they involve a number of financial restrictions with the most salient one being the reduction in your ability to leverage money. I want to look at the issue of credit and the idea of sacrificing quality of life from a more controversial and innovative point of view. Just by reading the title, the first thought that popped into your head was most likely related to how it would be incredibly difficult to change your credit score significantly without making an equally significant change to your quality of life.
But I want us to think about what sacrifice means in the long term. What I mean is if you make a sacrifice to your current lifestyle so your future lifestyle is better, that shouldn’t count as a sacrifice. Meanwhile, if you live without sacrificing any part of your lifestyle to build up your credit score -assuming it’s in shambles – then you are actually making a bigger sacrifice in the long run if your credit stays the same or worsens.
So, the main idea here is that making a short term sacrifice that leads to a long term improvement in the quality of your life really shouldn’t go down in your book as a sacrifice in the quality of your life. The question here is how can you be sure that the sacrifices to your current quality of your life will actually result in a net positive increase in the overall quality of your life in the long-term.
You Need to Give in Order to Get
The word sacrifice is a bit dramatic in itself in the sense that it elicits a feeling of losing something incredibly valuable when used in regular contexts. Sacrifice is so commonly associated with deeds like saving the lives of others or going above and beyond in your moral duties to society in some similar capacity. For this guide, you don’t need to cut off a financial arm or leg in order to sacrifice, but you do need to give in order to get.
What do I mean by this? I mean it’s impossible not to change your quality of life by some amount – at least in the short term – if you also want to have a positive influence on your credit score. Anyone can reach this conclusion intuitively. Why would your credit score change if you don’t do anything to better it and just keep the status quo? To make a comparison, changing your credit score is like working out – you won’t be able to get where you want to be if you don’t make a concerted, intentional, and goal-oriented effort.
The Cornerstone of Good Credit: Budgeting
Budgeting is the key reason why good credit is unattainable without some sacrifice – whether you believe it to be major or minor – to your quality of life. If you are currently in a position where you have bad credit or you don’t have the credit necessary to leverage the money to buy that new car you want or to fund that nice wedding you’ve been dreaming of, then it’s likely that you have inadequate budgeting skills.
Budgeting requires you to practice financial self-restraint and to critically evaluate your spending choices. You can do this on an individual level by downloading programs like Mint or You Need a Budget (YNAB) that can help you visualize what you’re spending the most money on in order to help you cut down in areas of spending that are luxuries rather than necessities. Another prudent thing to do is to seek out the advice of professional firms handling credit like Lexington Law which can help diagnose the explicit weaknesses in your credit and help with credit disputes.
Tying it All Together
After you understand the principle behind sacrificing in the short term in order to gain overall in the long term and combine it with a set of effective and conscientious budgeting tactics and skills, you will be on the fast track to obtaining that stellar credit score you want. The last thing you’ll want to be aware of is how credit bureaus and reporting agencies determine your credit score.
According to FICO, one of the leading credit reporting companies, there are five main ways in which your credit score is assessed. They are all very easy metrics to understand and control granted that you are aware of them – which is the purpose of your budget. Things, like paying your debt on time, not using the majority of your available credit every month, and not opening ten new lines of credit, are among the things that you can do that will positively reflect on your credit score.
The hard part is making a habit out of all of these points and consistently doing them over a period of a few months. That is the biggest change that most people will have to make to build up their credit – and that change is one that necessitates sacrifice.