Your Credit Score: So what if it drops!

Americans are probably more aware of their individual credit scores now than at any other time in history.  The entire concept of the credit score has more or less morphed into a type of larger than life indicator of financial health.  However, a great credit score actually indicates that you have debt - not that you don't have any!  So why is it that a family with no debt would have a lower credit score than a family with debt?

Keep in mind that the folks who use your credit score are those folks who want to add to your debt load so that they can benefit from the interest payments!

Given that bankruptcy is a means toward a new start - a fresh start - then the fact that your credit score may drop anywhere from 150 -200 points (based on a quick Internet search) may not be the problem we have all come to think.  A fresh start is not intended to put you in a position to get new credit driven debt - but to minimize your use of credit and allow you to live within your means - a cash only existence.

To take this thought further, let's assume that you already own your home (meaning you have a first and maybe even a second mortgage) and even a car loan.  It is very possible to keep all of these things even after filing bankruptcy (a Chapter 13 (more on that later) Bankruptcy will even allow you to catch up on missed payments).  Therefore, is it not fair to say that your credit score - whether high or low - is of less significance since you're not trying to qualify for credit?

Your credit score is important, but let's keep it in perspective!