On January 3, 2017, the Consumer Financial Protection Bureau (“CFPB”) fined Equifax and TransUnion for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers. The CFPB ordered TransUnion and Equifax to truthfully represent the value of the credit scores they provide and the cost of obtaining those credit scores and other services. Between them, TransUnion and Equifax must pay a total of more than $17.6 million in restitution to consumers, and fines totaling $5.5 million to the CFPB.
Are you surprised? After all, many of you express surprise when you hear me say, “life is not about your credit score,” and that many of you have been brain washed by the banks, credit card industry and credit reporting industry that are spending billions to make you believe that there is nothing more sacred that your credit score. The reason is obvious – if you think about it – if the financial industry convinces you that protecting your credit score is more important than making sure you have money to buy food and pay for housing when you retire, who will gain and who will lose? It’s obvious – the banks will gain – and those poor souls that carried $20,000 – $90,000 of credit card debt for 20+ years will have no money to retire with. Trust me – you can’t walk into the bank when you’re 78, retired and have no money and say, “hey, I have had a 700+ credit score my entire adult life, I’d like to cash it in for the $450,000 of interest I paid you over the last 35 years!”
Of course, if you are about to buy a home or a car, your score is relevant. You should not allow it to sink at the same time you are applying for a loan. You need to be strategic – so that you take the smart action to get rid of the credit card and other debt (using bankruptcy or non-bankruptcy options) at a time that best suits your needs – when borrowing is not needed for the next 1-2 years. Once the debt is gone, your FICO score will recover. The score is a function of total debt, pay history and available credit. Once the debt is gone, credit offers come and you take them – but you pay the cards off every month. The result, you quickly have a lot of available credit and no debt. That translates into a 750+ credit score. The key then – DON’T go back to where you were and start paying interest. If you put the money you’d pay in interest into your 401k or IRA – you will have plenty of money to retire with. You may think this sounds like a nice theory – but I can tell you it is a readily available reality – if you’re willing to take the right steps.
My resolution for 2017 is to continue an unwavering commitment to convince Americans that you can live on a modest income but enjoy a decent retirement – but it will not happen if you do what the financial industry wants – and that is to spend money on credit cards and waste your retirement by paying the banks interest, day by day, year by year, life by life.
On that note – it so happens that our next FREE seminar is February 1st – and it’s called, “This Resolution Counts – I’m Getting Out of Debt Now!” Of course, you’re invited. If you can’t make it or you’re in good shape and don’t need it – that’s great but I hope you will come to understand that life is not about your credit score – it’s about living!
Have a great week,