The Importance of Good Credit

May 16, 2009

Have you ever heard the stereotype that all Black people have bad credit? Well of course, this isn’t true, but it should make you think about where you stand in terms of your credit.

Chris Rock jokes, [My mother] would never pay a bill on time. "If they ain't cutting it off, I ain't paying." She would say, "The first bill is a suggestion. If they really want you to pay it, then they'll come and tap on your window." This may have been the philosophy decades ago, but it has no place in today’s world.

Over the past few years, our credit history has become one of the most important indicators of our financial success. And, in the past few months with the crash in the financial industry, it has become more important than ever. Nowadays, not only are lenders looking at your credit score, but so are employers, landlords, insurers and even cell phone providers, to name a few. Your credit history doesn’t only determine if you qualify for a credit card, but it can also determine whether or not you get the job, the apartment or even the cell phone plan you want. The only thing a poor credit history will get you is guaranteed high interest rates on credit cards and loans which will cost you hundreds of thousands of dollars over your lifetime.

In addition to your credit history/score being used to predict your ability to repay a loan, it is also used as an indicator of your judgment and trustworthiness. If credit card bills aren’t paid on time, a landlord wouldn’t expect his rent to be paid on time. If good judgment isn’t shown in handling personal finances, an employer wouldn’t expect good judgment to be shown at work, especially if the job is in the financial industry. So, if a poor credit history keeps you from getting a good paying job, of course the rest of your finances will also be affected.

You should think of your credit score as your most important financial asset. It is the first step in being able to acquiring more tangible assets such as: a car, a home, a business, or insurance - assets that will help to increase your net worth and secure your financial future.

Maintaining stellar credit in today’s world is essential. Luckily Rochester has a number of nonprofit organizations with the mission of helping people improve their credit and control their debt. Agencies like C.A.S.H., the Credit Education Bureau, Consumer Credit Counseling Services and many more are available to you for low to no cost.

Published in the Minority Reporter, week of May 16, 2009.