Impulse Buying and the Pejorative Effect on Your Credit Score
Typical Scenario… “I just have to rate the stereo setup in this car with the thousand watt subwoofer mounted in the trunk.” “I’m really excited about this thing, man.” “You’ll be able to hear me all the way to St. Louis and that’s only at half volume.” “I mean, dammit.” “How cool is that?” Hey, how long does it take you guys to install this?”
Actually, how uncool is that, and furthermore, what is totally wrong with this image. What if the proposed deal doesn’t close and the commission that Mr. Eager was anticipating for one doesn’t come through? So those easy monthly payments that started at 9.9% aren’t so easy anymore and end up at 29% and with no warning. I don’t want you to think I’m kidding for a second. It’s not crazy and it really can happen until the proposed law currently being legislated adds the necessary safeguards and starts regulating those kinds of rate and timeline changes.
Hang in there folks, as unfortunately you weren’t done yet. Being that this particular revolving account is capped at $2,000 and our guy has used about $1,720 including tax and the long-term guarantee and whatnot, he’s now well exceeded the maximum usage guideline of 35-40%, which it makes your credit rating take even more. another hit
Oh yeah, some more bad news. Okay, this is it. I promise. Sales were not very good in the following months and it became a matter of paying the minimum credit card payment of $65.00 or his cell phone bill. It’s okay. Go ahead, guess and connect the dots on this one.
Just a little lesson in “what not to do” based on the inner workings of our unfortunately complex credit scoring system, a system that means everything you need to apply for any type of loan. No lot can have a more dramatic effect on your credit score than pushing your revolving charge balances to the limit or missing a payment, and installment accounts like car loans and mortgages don’t even come close.
Admittedly, the example used is a bit overly dramatic, but what I really want to leave you with besides a little laugh is don’t reach for plastic unless, without a doubt, you have the ability to pay the statement on your en in full at the end of the month in which it is received. I really don’t care if you have ants in your pants and want to dance. One man’s car stereo is another man’s little “what happens in Vegas stays in Vegas” which could be even worse with gambling losses and such (great topic for next time, right ).
Behave, be smart, and don’t make me slap you again.