There was a time when keeping your credit score in the green was easy. Sorry, those days are over.
I was like you once. I had a not-so-great credit score, mostly because I fell into a trap more common than the flu: websites such as Credit Karma, WalletHub, and others advertise that:
“The more credit cards you have, the higher your credit score will be!”
The truth is, this is a myth. A con. A scheme. Low credit scores are never a good thing, and though there are solutions we will discuss, the first thing I feel obligated to mention is, that these are not completely “false” statements.” If you have, say, a 700 credit score, and you end up with ten credit cards with a low APR, sure, you can succeed – only if you can pay off the debt.
This Is How It Starts, Anyway
If you have millions to spend, and you keep those 10 credit cards in good status (i.e. paid off, even when accounting for the interest that will envelop you over the years as that APR climbs up), then sure, you will quite possibly succeed, and your credit score may go up! But do note that even Credit Karma warrants the following issuance:
“Having too many open credit lines, even if you’re not using them, can hurt your credit score by making you look more risky to lenders. Having multiple active accounts also makes it more challenging to control spending and keep track of payment due dates.” – credit karmma
Yet, people continue to fall into this trap, assuming that because you can obtain a credit card means you should. Over the years at 10X-Business Solutions, we have seen hundreds of cases just like this: someone assumes that they “qualify” for a credit card; they apply through the app (yes, an app!); and then three years later, they realize that not only did they multiply their credit limit. They also multiplied their debt.
Take the tale of, let us call him: “Mike.”
“So, Credit Karma launched. I had a 700+ credit score. I figured that, because I was able to afford the $300 credit line here and there, I would never be in debt if I just paid it off immediately. Which I did. However, what happened was far from my dream. Not only did having so many accounts lower my credit score; I also found that simply because I had the credit card, I would be able to buy here and there…”
What Just Happened?
You see, the one thing these credit card websites will not tell you is that, we are human. If we feel we have the money to spend on something, we will spend it. We are a species that, somewhere along the line, developed an actual internal “reward system” for spending.
As an example, we are fed pleasure when we make a purchase.
There is a chemical in our brains called “dopamine,” which by now everyone has heard of. Though it is susceptible to assume that spending releases this chemical, rewarding you with a “good, warm, fuzzy feeling” inside, it is still the same chemical the brain releases when you do dangerous drugs.
How This Happened
No one knows. Currency was invented 7000 years ago when Kings and Queens decided that it was easier to spend a gold coin in exchange for a giant piece of raw fish. Rumor has it that this is because they wanted to find a way to profit off of trading, but moving onto the part that matters: spending is pleasure, and the experience you have when you buy a pair of jeans, as an example, is the same as that of a sexual orgasm! Yes, this is a fact: when you buy a pair of jeans, you receive the same chemicals as sex!
Regardless of the science behind spending, we here at 10X Business Solutions believe that there is a way out of this “Credit Karma” trap. One way is to realize that just because an app (one worth roughly $8.1 billion as of their recent merger with Intuit) tells you that you can have a new credit card does not mean you should go ahead and take the offer. First, take a look at the APR. Is it above 15-20 percent?
Typically, it is. That means that every year, $1.00 in debt will climb to $1.15, and imagine if you multiply that figure by 10, or 100, or 1,000 (or, in most cases, 100,000). Second, did you really need that card to begin with? My father once told me that credit cards are seen as “emergency signals.” In other words, only when you are flushed of cash, is when you should be using a credit card.
Compulsive Spending
Believe it or not, compulsive spending is a disease simultaneous to hoarding. It is called: “compulsive spending disorder,” and no, we are not making that up. Studies have shown in recent years that roughly 6 percent of people are compulsive spenders, and the DSM-5 (the manual of psychological diagnoses) instated it as a disease in its most recent update.
What is important, however, is realizing that just like compulsive spending, obtaining new credit cards feels almost like you are receiving money. This is why 15 percent of Americans have up to $10,000 in credit card debt, and 6 percent have over $10,000 in debt. You see, it is not just compulsive spending.
The act of obtaining a new credit card, seeing that: “Approved” notification, receiving the new card in the mail, and the ever-so-fun experience of peeling off that little sticker they attach to it is, in and of itself, your mind and body tricking you into believing you have just obtained “extra money to spend.”
So What Can You Do About It?
You can contact us! This is not an unsolicited pitch. We truly believe that there is an easy way out, and yes, it is legal. Tradelines, as you will see, are an effective and congenial method to raise your credit score out of the aftermath of the “Credit Karma” conviction. We can help, but just like an alcoholic would have to realize they have a problem first, so, too does the “compulsive spender.”
We truly want to hear from you. If nothing else, we hope you enjoyed this blog post, and do yourself a favor this fine morning: delete those “credit card” apps from your phone. See if you can take the first step, and then let us help with the second, third, and even forth steps toward a happier life!