When is it Smart to Harm Your Credit Score

by Asha Ritu

Have you ever been in a situation where taking more debt was the only way out of a financial situation? Or maybe when you had to delay repaying your debt due to a more important financial concern?

While both these situations would adversely affect your credit score, it still made sense to let your score suffer.

So while high credit scores help you when applying for loans, get you more credit cards, increased credit limit etc., it might be sensible to harm your credit scores in certain financial situations to help your overall financial health.

Read more: Credit Scores Don't Measure Your Financial Health - Here's Why

Let us understand when it is smart to harm your credit score.

  • Getting Out of Huge Debt - When you have accumulated a lot of debt, then it is wise to look for ways to clear it off. Maybe you will have to look for debt settlement programs, or file for bankruptcy, if the situation is really bad. Both these steps will harm your credit score, but you must still work towards clearing debt than creating more debt.
  • Sudden Financial Emergency - Sometimes when you are living from paycheck to paycheck or facing a job loss or sudden financial emergencies, then it might make sense to delay your credit card bill payment beyond the usual 30-day period. Again, this move will negatively impact your credit score, but taking care of your basic necessities is more important than worrying about your credit score.
  • For Financial Well-Being - When other aspects of your financial health like saving, investing are suffering then it might be okay to work on saving up more money and let your credit score take a hit for some time.

Over-dependence on your credit score might push you to make wrong financial decisions so it is extremely important that you take well-informed decisions, keeping the long-term and short-term goals in mind.

Remember that your credit score is a partial representation of your financial wellness. You should be smart enough to know when to chase a good score and when to work on the other aspects of your financial wellness.

Follow our 'Financial Score Vs Credit Score' Blog Series:
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