I’ve been told by a few people now not to worry about making loan payments in full, and to just pay enough to keep the lender off my back. Now, I don’t know if making less than minimum payments would actually do that, but I do know it would hurt my credit. When you don’t make the payments you say you’ll make, it hurts your credit, which is basically a measure of how much a  business can trust you to pay a bill or make a loan payment on time, and at the amount you agreed. If they can’t trust you to make the payments you say you will, they won’t do business with you.

This applies to other payments as well, such as rent, utility bills, and most similar types of bills. And when it comes to obtaining these services, the person you want to enter into an agreement with will check your credit to be sure they can trust you. Personally, I think this system is a little bit on the invasive side, and can harm people who have made one or two mistakes but on the whole did pretty well, but it’s what we have to work with unless it changes.

Now, another question is whether or not we really need credit. And the simple answer is that, unless you have a boatload of money, yes, you will most likely need credit, even if you never take out a loan to make a purchase outside of what you can afford in one lump sum. If you want a place to live, you’ll need credit to prove your willingness and ability to pay rent on time to your landlord, or to obtain the loan you need from a bank or credit union. You’ll also need it for utility companies, your cell phone bill, and possibly insurance companies (I’m not sure on this one). Assuming you do need good credit for insurance, this means you’ll need good credit to be able to drive in most states, even if you can afford a car outright with cash.

Certainly, there are other considerations as well. Some people get conned into making really bad agreements. Unfortunately, they do make the choice to enter into those agreements, and should honor them, while at the same time learning not to do so again. Naturally, an agreement that is illegal would be an exception to this, but I’m not sure if any poor agreements fall into illegal territory or not. Anyone who is in a poor agreement can attempt to renegotiate, or make a lot of noise about it to warn others, and both of these strategies may help, or they may not. I’d strongly suggest renegotiating first, as it’s nice to give people the benefit of the doubt and a chance to change, besides which, making some noise will possibly ruin chances of renegotiating. It can also help, but there’s no reason not to be civil first.

There’s also the possibility that a con artist has stolen someone’s identity, and ruined their credit for a quick buck. In this case, it’s not your fault, though you’ll want to learn some good security practices in the future. In the meantime, search out all legal recourse, and do the best you can. Unfortunately, I’m not sure if you can recover credit that’s been ruined by someone else any better than if you ruined it yourself. I believe it is easier, but still a long road, but I could be wrong. If I’m right, and it can’t be restored quickly, then this is one more reason I think the credit system would need reform or replacement.

Now, if you have bad or no credit, that doesn’t mean you absolutely won’t be able to do any of these things. It will put you at a disadvantage though, and you’ll likely have to search around for people willing to take a risk on you. You’ll also be in a bad position to try to haggle your way to a better deal, since you won’t have as many options. Still, I do know of some people who’ve overcome bad credit by finding alternative means to get what they need, and slowly built it back up to a point where they could use it to get what they want and need. Still, I’m hoping some people may read this so they can make an informed choice about how they handle their credit, rather than being surprised when they can’t get the things they want or need in building their life. However, when you consider that credit is a measure of how well you keep your agreements, it seems as though living honestly would lead to good credit. I certainly understand that bad things can happen, and cause people to have to make difficult financial choices though. Still, if you talk with all the companies involved, I think it’s fairly common to be able to make a deal in difficult times, which will hurt your credit considerably less than completely ignoring what you owe.