It wasn’t that many years ago when having “good credit” meant having “no debt”. But that was when we lived in what was called a “cash economy”; a time before credit cards.

But now, a person’s credit status is based on the fact that he or she must have debt in place, must manage it properly, and must show both the ability to owe somebody and the ability to pay it back. And, often…

It’s a bit screwy when you think about it. You must get into debt in order to show that you have earned the privilege of being in debt, so that you can prove that you are willing to pay it back. Once you have accomplished that, then you can continue to create more debt until you cannot pay it back. That’s it!

In business, we refer to the concept as the Peter Principle, named for the management formula created by Laurence J. Peter. The theory states that business managers will consistently move through increasing levels of competency until they finally reach their level of incompetency. In other words, they get promoted until they are no longer good at what they do. Then they get fired!

Such is the way of the current consumer credit industry. Driven by increasingly accessible bits of “big data”, the “big lenders” continue to peer into every aspect of a person’s purchase history, social interaction, personal interests, and many more attributes which identify each of us as either worthy or not worthy of the myriad of financial offerings and business opportunities that may arise. The upward spiral of collective debt seems both odd and reckless, all the while held outside our limits of personal understanding and control.

If you are interested in going deeper into this subject, you may enjoy reading the September 2016 book release entitled Weapons of Math Destruction, written by Wall Street quant Cathy O’Neil. It will likely frighten you.

But, for now, let’s agree that we live in the world that surrounds us today and it is important to understand the rules and to play the game in a way that will give us the personal outcome we desire.

Here is a highly informative consumer booklet produced by the FICO® Score people that you can download right now and hand out the link to your clients. It is clear in its message and it is an easy read. Download the PDF here: Understanding FICO® Scores – What You Need To Know About The Most Widely Used Credit Scores

And, remember, everyone can get a Free Annual Credit Report by visiting

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