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If I had a better credit rating…

April 20, 2022


If I had a better credit rating, I would buy a newer car.   If I had a better credit rating, I would buy a bigger house.  If I had a better credit rating, I would go on a great vacation.  If I had a better credit rating, I would _________________________ (fill in the blank).

My grandmother used to say, “if wishes were horses, beggars would ride”.  It never ceases to amaze how much attitudes towards debt have changed.  We don’t even call it DEBT anymore, these days it goes by its new handle “credit”.

When someone says “I have good credit” they mean “their credit card still works” – there is nothing good about debt, “a rose by any other name” as Shakespeare said.  Ironically, we have come to associate debt with success, don’t laugh too hard, it’s true.  If you have bad credit (defined as little access to debt) you may be frowned upon, but if you are in debt up to the eyeballs and can still get more debt, you are a mover and a shaker.

If I had a better credit rating, I could spend money I don’t have, and can probably not afford to repay”.  That is a more accurate depiction of what would happen to some folks.  Let’s think about one well known icon of success, Elon Musk, with a net worth of a mere $279,000,000,000 – imagine.  Do you ever wonder what his credit rating is like?  Would it even matter?

When we think of billionaires, we imagine that money is dripping through their fingers, but the reality is quite different.  Elon Musk turned down his Tesla salary of under $60,000 per year, taking shares as payment instead, and has borrowed $500,000,000 or 1/558th of his net worth from financiers. Elon’s wealth is not cash in the bank, but rather the accumulated value of his business interests.

To put Elon’s debt in perspective, if you owned your own home, mortgage free, and it is worth $558,000 it would be as if you borrowed $1,000 using your house as collateral.  If you are wealthy and do not use debt you may still have a crummy credit rating, because you have not used credit.  Interestingly, if you are in debt up to the eyeballs you could have a better credit rating than a rich person.

Let’s fill in some of the blanks:

If I had a better credit rating, I would…

  • Buy a new house with a mortgage of $800,000 – monthly payments of $4,100, and
  • Buy a new truck for $95,000 – monthly payments of $1,837, and
  • Take a friend on a two-week vacation $7,500 all in – monthly payments of $238, and
  • Buy a boat $205,000 – monthly payments of $3,307.

Total monthly payments:  $9,482 – that is equal to the average monthly Canadian Salary four and a half times over, and that will take many, many years to repay. Be smart, ditch the debt, and live debt free.