Page 28 - Smart Money

Chapter 1

A lot of the time, I think people spend money to feel better. After
they have bought the new item, buyer remorse kicks in, and they
feel bad when they realise how much they have spent. Then they
just go out and do it all over again, and the cycle continues.

Culture and background can have a big impact, too. If you grew up in a
family that didn’t have a lot of money and relied on credit to buy things,
or you haven’t been taught respect for money, when you are old enough
to get your first job and start earning your own money, you can quickly
get into the trap of spending everything you’ve got, and then some, if you
have a credit card.

If you haven’t been taught to value money and how to make it work for
you, you just continue to spend, and wonder why you never seem to have
what ‘everyone’ else has.

Bad results

When you apply for a home loan, the bank will do what is called a credit
score. If you regularly pay your bills and other debts after the due date,
you are probably going to score low and be declined for a home loan
because of your previous repayment history. A bad credit score can be to
your detriment when you apply for a home loan, or even a personal loan.

Each bank does it differently, so it is better if you have a really good credit
score, which means you don’t have any defaults or late payments. Those
go hand in hand with your credit score.

Key Point

Not all banks use credit scores, but most do. So if you want more
options, and multiple potential lenders, then you need to have a really
good credit score.