November 21, 2007, 7:00 am

Will A Bank Sleep With You? Understanding Credit As A Relationship Part2

by: The Financial Blogger    Category: Banks and You,Credit Rating & Credit Bureau
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cheater Yesterday, I wrote about how to build a strong credit history. As an example, I use a relationship between two individuals; Stephen and Lara. Today, we will see how Stephen can easily destroy his relationship with Lara. As a matter of fact, your credit score can be torn apart pretty quickly too. Stephen and Lara are now making a beautiful couple after a few months of good relationship. Let’s see what happen when things turn sour.
Huh?! No, I wasn’t looking (minor things that would hit your credit score)

Lara is starting to have doubt on Stephen. She thinks he is looking at other girls once in a while. Stephen denies those affirmations but his friends are telling the opposite. Do not try to lie to a women, they have a sixth sense for this kind of stuff. So do banks. It’s easy for them to pull out another credit check upon renewal of your credit accounts and acknowledge that you applied for more credit cards. The number of inquiries (looks) and the number of recent credits (a new cute friend) will hurt your Beacon Score but in a minor way. Lara will start to watch Stephen closer to make sure he doesn’t go anywhere else.

Sorry honey, but I will be late tonight, we have a case to finish (more credit issues)

Stephen is starting to make up excuses, his friends are shy to speak to Lara. The doubt is growing as there are many indications that Stephen is not being 100% honest in this story. The explanations are not consistent and it is obvious that Stephen is lying. When you start getting late on your payments, banks are getting very suspicious. They will call you and ask questions. As it is the case in a relationship, it will be worst if you start lying.

Lara… this is not what you are thinking it is… (severe credit issues)

That’s it, Lara knew it! She finally has the proof that Stephen is lying…. in the bed with another women. The trust has been broken and so the relationship. Lara will not be able to look at Stephen and believes him when he says that he loves you. Well being late on cards and going to the point of having a collection agency on your back or declaring bankruptcy is exactly the same thing as cheating on your spouse. Credit is all about trust and you perfectly destroyed any hope of this happening.

Come on Lara, it was a mistake, why can’t we get back together like the old times? (trying to rebuild your credit history)

Many people like Stephen, think they can get away with their “small mistake” and get back with their original situation. So when the bank declines your application in regards to credit issue, ask yourself this question: “Would Lara sleep with Stephen again after what he did?”.

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Comments

by: TKO from Ontario | November 21st, 2007 (10:00 am)

You’re analogy of Credit and Marriage is brilliant.

This type of reading should be mandatory for all high school students.
I’m not a gambling man, but am willing to wager that we would see a lower rate of divorce and bankruptcy.

Cheers,

TKO

Hi TFB,
I have a credit question that you might be able to answer. Does use of overdraft protection on a chequing account hurt your score?

by: The Financial Blogger | November 23rd, 2007 (7:34 am)

MJ, If you use your overdraft protection and pay the minimum interest on time, it will not hurt your credit score.

Obviously, if you always use the maximum overdraft available, it will hurt your credit score at some point. Overdraft protection is supposed to be use occasionally for a short period of time.

In my opinion, you are better off linking a line of credit to your account instead of an overdraft protection (better rate, more room).

cheers,

FB.

[…] Will A Bank Sleep With You? Understand Credit As A Relationship Do not try to lie to a women, they have a sixth sense for this kind of stuff. So do banks […]