Terms like ‘Credit’, Credit Score’, ‘Credit Rating’, and ‘Credit History’ are all nothing but words introduced to hide the term ‘debt’. This wouldn’t make much difference to our finances, but we feel better, mentally, because we don’t like to hear about our debts.

When someone asks, ‘What’s your credit?’, they generally mean what is your credit score. And credit score is the number that says a lot about your finances, or rather debts.

Most of our lives are controlled by this term ‘credit’, but hardly some of us are aware about how it works, and how this number is calculated. Did you know that closing an account (any account) can hurt your score, sometimes adversely? It doesn’t really make much sense if you think logically. Closing credit accounts means we are trying to get your debts reduced by not using it further. But they mark our score negatively. Does this make sense?

By punishing us on closing down credit accounts, the authorities encourage people to use more credit. Besides, the tools that increase use of credit are readily available to us, such as credit card. By swiping the card, we don’t simply feel the money going out of our pocket. So, spending becomes easy, and we keep accumulating credit all our lives.

We know using more credit might affect our future plans. Yet we keep using it. If you have a bad score, you will find it difficult to get a job, rent an apartment, buy a car, or even a cell phone plan for your iPhone. But to get a good score, as mentioned earlier, you need more credit. Without using credit, you are not even allowed to have basic amenities.

Credit, today, influences our lives to a large extent. And the worst part is, we have to abide by the law, use credit, and learn how to save our lives from being financially ruined.

Simply stepping back for a while, and witnessing how ‘Credit Score’ controls our lives can sometimes be an eye opener. But unfortunately, we cannot change the way it works.