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Why You Should Start Paying Attention To Your Credit Today

I have a question for you. Let’s say that you are the winner of a raffle. You’re then given the choice to either receive $100 today or $1,000 a year from now. What would you choose? In other words, are you someone who prefers instant gratification over delayed gratification?

If you’re among those who chose to take the $100 today it’s very likely you’re someone who has a strong affinity towards instant gratification. But is that the best way to make life decisions?

That’s exactly the question that psychologist Walter Mischel tried to investigate when he performed a series of studies in the late 1960’s and early 1970’s known as the Stanford marshmallow experiment. In the studies, children were offered a choice between an immediate small reward or a larger one that they would have to wait longer to receive. Often times the reward was marshmallows, which is where the name comes from, but other times cookies and pretzels were also used in its place. Interestingly, when the researchers followed up with the children years after these initial studies, what they found was that those children who were able to wait longer for the larger reward tended to be better off later in life. The life measures that were used to assess these outcomes were things like SAT scores, educational attainment, and BMI among other things. 

It’s fair to say that the same conclusion can be made for people and their finances. Someone who’s too preoccupied splurging on things like a trip to Europe, an EDC ticket or the latest pair of Yeezys to afford their minimum credit card payments will probably not fair well when it comes to their credit score. As fun as it may be to be to pop bottles in the club every night, the harsh reality is that for most people this lifestyle is simply not sustainable.

The damage that you are doing to your future self from a financial perspective is two-fold. For one, the money you’ve spent is already gone forever. Even worse though is that continuing to live a lavish lifestyle beyond your means will end up costing you even more money down the line. If left unchecked, this can result in a disastrous downward spiral leaving you with a hopeless sense of regret and a credit card bill to match. 

Another reason to start paying attention to your credit sooner than later is that the longer you go on maintaining a less than satisfactory credit score, the more difficult it will be to raise it when you finally decide you do want to do something about it.

Don’t take this all as bad news though. There is still hope. You just need to understand that everyday is an opportunity for you to decide between instant gratification and a better future. 

By planting the seeds early and actively making choices that will improve your credit score in a matter of 6 months as opposed to 6 years, you’ll be much better off as you get older. Depending on how much you’re able to improve your credit score, you’ll significantly improve your future cash flow. This means you’ll actually be able to spend more of the money you earn on yourself rather than on interest payments. Furthermore, you’ll have access to special financial products that you may otherwise not be able to take advantage of, which will again work to save you even more money. This can come in the form of premium credit cards, special rates on loans, better consolidation programs, favorable mortgage terms, and nowadays even cell phone plans.

What’s more is that once you’re at a point where you have the credit score you want, maintaining a credit score becomes much easier than trying to improve it. All you need to do is make sure you’re doing everything necessary to keep your score from dropping and you’ll be golden.

So what are those things you need to do in order to maintain or improve your credit score? That’s exactly what we’ll be covering on our next blog post so stay tuned. If you don’t want to miss it, go and hit that subscribe button. Your future self will be glad you did. 

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