There are many reasons that people find themselves struggling with debt. For some, it is largely out of their control. Job loss and serious illnesses or injuries can leave families without much needed paychecks. But for others, simply not understanding basic financial principles can play a large role in their financial struggles.
President Obama has declared April to be National Financial Literacy Month, and with good reason. People today have many more financial worries than previous generations. For example, we are largely responsible for building our own retirement funds. Prices for necessities continue to rise. And the average person has access to considerable lines of credit. So it is easy to see how many people end up relying on bankruptcy for the debt relief they need.
Of the many financial issues, perhaps credit scores are the one thing that apply to everyone, regardless of economic status. Everyone knows that they are important – even essential – but few people understand them. The Chicago Tribune recently published these tips regarding credit scores that might be helpful for people everywhere, including here in Miami:
- Everyone is entitled to one free credit report from the three major credit bureaus each year. Keeping tabs on your credit score can help you identify inaccuracies early. Experian, Transunion and Equifax are the three primary credit scoring companies, and you can get a copy of your credit report from AnnualCreditReport.com.
- Credit scores do not consider your income. Surprised? Many people do not realize that credit scores are solely based on the credit you have available and how you use it. Whether you make $10 an hour or $100,000 a year, your income does not impact your credit score.
Of course, a person’s credit score is not the only indicator of financial trouble or success. But it is an aspect of financial literacy than many people do not understand.
Bankruptcy is yet another financial mystery for many people. Regardless of your level of financial literacy, if you are struggling with debt, it may be time to consider bankruptcy as an option.
Source: Chicago Tribune, “Quiz: Your money literacy,” Gregory Karp, 15 April 2011