Wealthy People Need Credit Scores Too

It seems that most of the talk about credit scores these days centers around middle and lower class people. However, wealthy people are not immune to credit score difficulties. Just because you have a lot of money, does not make you immune to the damage that a bad credit score can cause in your life. Having bad credit will still cause you the same types of problems, just a higher class of problems.

The Wall Street Journal has a great article that addresses this situation entitled “Credit-Score Pitfalls of the Wealthy“.  This piece talks about how even the rich need worry about their credit scores. Being wealthy doesn’t make you any smarter about credit than your average Joe, When these people realize that the problem exists, its often times too late to do them any good.

“Regardless of their finances, age, gender or ethnicity, people don’t have an understanding of how credit works,” says Jeremy E. Portnoff, a financial adviser with offices in Union, N.J., and Tustin, Calif. “They should be aware of their scores, especially in this environment.”

He recalls a client who, despite more than $1 million in assets, had a poor credit score because he avoided any kind of borrowing — he rented his home and didn’t use credit cards. Because of that, he would have had difficulty getting a mortgage — something he plans to do when he retires.

Whether your looking to buy a $100,000 home, or a $10 million dollar home the chances are that your not going to have that full amount sitting on hand. That means that your going to need a mortgage, and your ability to get that loan as well as the terms that you get it under are going to be determined by your credit score.

A lot of the things that being wealthy give you the benefit of being able to do, are things that are going to hurt your credit score. If you always have the money in the bank to pay for your purchases and thus avoid using credit cards, your credit score is not going to be very good. The time will eventually come when you need that score to get a loan for a house or starting a business, and you simply will not be able to get it. Possibly worse yet, if you do get it you’re going to pay a much higher interest rate than you probably should. Wealthy people typically didn’t get that way by pissing away money on stuff like bad interest rates, so that often times drives them crazy.

With wealthy people its even more frustrating, as well as avoidable, to have a bad credit score. Its usually not simply a issue of I can’t, but more an issue of I haven’t or I didn’t know. Those are problems that are not any less real, but certainly ones that should not exist.

That’s why even if you can afford to pay cash, its wise to use credit for some of your purchases. Simply using the card and then paying off the full balance at the end of the month with your available cash will do wonders for your credit score. By taking those simple steps, your credit score will be high for when you need it down the road.

The advice is the same for everyone no matter what your economic class is. The first step is to know what is in your credit report and what the score is. Knowledge is really the key just like in anything else. Only once you know what your score is can you go about actually taking measures to improve it. A whole lot of the time people don’t even know about wrong information that has been attributed to them that’s sitting in their credit report and thus hurting their credit score. The credit reporting agencies are not perfect and they do make mistakes so its important to check up on them. It’s just basic financial responsibility, if you wait until the last minute you’ll probably find out that it’s too late to do anything about it as these things do take some time to iron out.

It all basically comes down to staying on top of things. Wealthy people often times don’t exhibit the care and diligence that is necessary in regards to financial manners. We live in a society where credit is imperative anytime you want to make a major move in your life. Keeping up to date with your credit report and score, will determine the terms you get for that major move as well as if its even possible for you to make it. Having a good credit score is imperative in the society we live in, its a fact of life these days.