One of the most misunderstood areas of our financial planning practice is credit. We have found that people in all walks of life seem to find consternation in its complicated formulas and seemingly arbitrary methodologies. Yet, it is a critical element of sound financial planning. Mistakes can be costly and have a long-term effect on your finances. For some of the most dysfunctional credit abusers, it can be like alcohol, food or gambling: difficult to control bad behavior.
Understanding your score and using it to your advantage can be the difference between financial success and failure. The simple premise is that creditors reward those that honor their commitments and punish all others. (more…)