I remember when I was putting a plan together on how I was going to pay off £15,000 worth of debts. This was a combination of historic debts (which I was ignoring) credit cards, store cards and car hire purchase. At this point, I became disgusted by my debts. I was angry at myself for all the interest rates I would be paying and spending money I never had. I was also angry at creditors for lending me money when I obviously couldn’t afford to pay it back.
My husband and I decided that we would tackle our debts aggressively, using the debt snowball method, which I shared with you a few months ago. I also decided to close my credit card. I got a lot of stick for this from friends and family who did not support my decision.
Knowing what I knew about how the banks operate, how interest rates work and how building your credit is a trap to get consumers to spend more and take on more debt, I stuck by my decision and closed it anyway.
The action I took may not be for everyone, but what’s important is that you know what your options are. When you consider the pros and cons, you can make a decision on how to move forward.
Of course, I will need credit in the future, especially if I want to buy a house . However, my goal is to be debt-free before buying my home, so I have time to build my credit. This will show creditors that I am responsible for my finances.
So I guess my answer to your question is that you have to evaluate your individual situation and be fully aware of the pros and cons to the decision you wish to take and then move forward with what you think is best. It's also important to discuss the decision with your partner or anyone you have a financial connection with.
In our blog post Credit Score Explained, I offer tips for those who want to build their credit by looking at the following :
And if you are building your credit find out more on how you can build your credit responsibly