Credit Crunch

I pulled my credit report the other day in anticipation of getting approved for a lease and found out a funny thing. I have NO CREDIT. I don't owe on anything; I have no car loans, credit cards or personal loans-just my mortgage.

Not owing a lot of money is a bad thing in the eyes of the credit bureaus. Because I have no revolving debt, I am considered a bad credit risk and I'd only be eligible for bad credit personal loans. You'd think NOT owing money would be a good thing, but I am considered a bad credit borrower because I have no credit currently. What a country!

There are still plenty of loans out there for folks with bad credit. The problem with bad credit personal loans is the rate is usually much higher and the terms are usually unfavorable to the borrower. The problem is, for folks in this situation taking out a bad credit personal loan to get out of debt often compounds the problem.

I gave up on credit cards a long time ago-the rates just kept going up. I finally gave up on them all together. It's a good thing I have some cash stashed away to expand my business, otherwise I might be forced to take out a bad credit personal loan to get the ball rolling.

I think it's good that folks with no credit or bad credit have a place to turn, they just need to be careful not to get in over their heads. Borrowing to get out of debt is dicey unless doing so will lower the total dollar amounts of their "nut."