No credit check! SCAM! …you are approved! SCAM! …you have been selected! or maybe based off your credit profile you have been approved! (all together…SCAM!) Once I started rebuilding my credit about a year ago, these types of credit solicitation junk mail rapidily increased. Apparently this trickery is working most American household have an average of $3500 in credit card debt alone. After you figure out whats going on, then it just becomes funny. Seriously, I grabbed a stack of junk mail not yet opened and sat down with my daughter. We were discussing money and how the banks create money out of thin air. She didn’t get a kick out of that concept it really upset her! It was good to see her begin to understand the ‘system’. Back to the stack of junk mail.
Babygirl watch this! Watch what is about to happen if I willingly allow it to happen. I don’t recall exactly the order of each letter but it went something like this:
- You are approved for up to $1500 apply today. @23.9%
- You are preapproved for up to $700 apply today. @31.3%
- Design your own credit card. Pre approved up to $400. @24.9%
- Consolidate & transfer up to $1500 to your new card. Approved. @26.9%
On and on and on….hey mister dj! jk (…anybody remember that song)
This really opened my daughters eyes as we continued she was able to explain the trickey that was being presented. Hopefully she will retain this valuable informative lesson.
Do we need credit? The answer is both yes and no! The one that applies to you is simply based off your current financial health or your financial stability.
Best selling author, millionaire & radio talk show host Dave Ramsey says he doesn’t have any credit/fico score. Dave has a very detailed step by step process that can truly help anyone that wants out of debt. You will find his books on the resources page. Total Money Makeover is highly recommended. If you have overcoming the debt trap and seeking how to setup your family for financial increase & stability Dave Ramsey’s Financial Peace (see Resources) provides a step by step process.
Credit effects us when car shopping, house shopping and insurance just to name a few. The better your score meaning the higher your score (680+) the lower your interest rate will be. Have a low credit score (680-) and your interest rate will most likely be double digits. Its important to note that this isn’t simple interest but compounded interest. There is a big difference. Simple interest in short, I’ll give you $100 for $40 (40%) on the hundred. Meaning you will owe a grand total of $140. Compounded interest at the same rate says for every month when payment is due, multiply your balance by the 40%. It’s important to note the interest is always paid first then principal or initial amount owed.
Robert Kiyosaki, millionaire & best selling author of Rich Dad Poor Dad (see Resources), used credit to build his businesses. Read his story to see how he did. All credit is not bad credit!
In conclusion, my10cents, if the system is a scam, scam the system.