Busting the Credit Card Myth

There are many credit card myths prevalent—and it is time to bust them, once and for all. So, let’s begin.

Myth #1 – It’s all because of my bad luck

The Truth – Nearly always bad credit score is because of unsound financial decisions and indiscipline. If you want to rectify the situation and don’t want to again land up in this kind of soup, you own up to your past mistakes and change your mindset. Everybody makes mistakes, and certainly, you wouldn’t be the last person on the earth to show the lack of discipline in financial matters.

But now could be the time to put an end to all this and make a conscientious effort to get thinks back on the track. For instance, there’s no harm in approaching licensed moneylender for payday and other small loans as long as you pay off quickly; otherwise, you end up paying a lot more because of higher interest rates.

Myth#2 – My credit rating will now always be bad; it will never improve

The Truth – Whether your credit rating stays as bad as it is today or becomes better (or even worse) depends solely on you. Of course, things won’t change in a day, but if you plan things well and more importantly execute your plan correctly, you can gradually improve your credit rating. How fast or how slow your rating will improve depends on two things: how bad your credit rating currently is and what corrective steps you now take.

Myth#3 – I need a financial advisor to improve my credit rating

The Truth – A financial advisor can help you improve your credit rating; there are no two ways about it. However, you can do the same alone. Having a financial advisor by your side is not a prerequisite for improving your credit rating. As said above, what you need is a financial plan and then you should execute it properly. For example, start by paying off loans with higher interest rate. Alternatively, if you only have credit card loans, you might want to consolidate your debt into a single personal loan, which has lower interest rate than credit card loans. Similarly, don’t become a defaulter because that will make things only harder for you. Instead, contact your lenders and convince them that you have every intention of paying back your debt.

Myth #4 – I should the maximum amount of loan from money lenders because they don’t have stringent criteria for approval

The truth – It is true that legal money lenders Singapore don’t do the same kind of background check as banks. However, they do check your credit rating and can turn down your loan application or approve a loan for a smaller amount than you have asked for if they find your rating unimpressive. But the main point is that you should take only that much loan that you need and can repay. Otherwise, you will never be able to get out of debt.