Losing at the Credit Score Game

06/12/2010 05:12 am ET | Updated May 25, 2011
  • Don McNay Best selling lottery and structured settlement expert

I hope that it's only amnesia
Believe me, I'm sick but not insane

~Pousette-Dart Band

People often ask me how to improve their credit score.

My usual response is why?

If you need to improve your credit score, it usually means you have lousy credit.

Before trying to fix the score, people need to ask themselves how their credit got so bad to begin with.

Some would be better off not having access to credit at all. They can't handle it.

I'm not talking about people who got behind because of medical bills, life emergencies, or unemployment. Those are people with a good credit history who had something bad happen to them. They deserve a second chance.

I'm focused on the other category: people who spend beyond their means or spend money on stupid stuff.

I don't want those people to have access to credit; if they do, they will get in trouble again.

They need to figure out how they got in trouble the first time.

They need to look at themselves and understand some basic principles about finance.

I tell people to spend less, pay for things in cash, start budgeting and write down all of their expenditures.

Many need to learn the difference between needs and wants. People need food, clothing and shelter. They don't need the latest IPad.

People often get into trouble trying to keep up with friends and neighbors who also make stupid spending decisions.

Once that spirals starts, it rarely stops. Those who are caught up in it spend all of their lives trying to keep ahead of creditors.

And they think that getting more credit is their answer.

My advice rarely goes anywhere. Particularly with those out to impress their buddies.

I run into people who blow all their money every weekend and have no long run plans.

Gamblers have a term for people with that type of financial outlook: suckers. They call the money that these people spend "sucker money".

There are a lot of suckers out there. Likewise, there are a lot of people who want to take advantage of them.

If you have a lousy credit rating, there are a host of the sub-prime lenders, high-interest credit card issuers, check cashing companies and payday lenders dying to get their hands on you.

They will give you more debt and more bills to pay.

A cottage industry has developed among companies claiming they can improve people's credit scores.

I've never seen these companies achieve any real success. They prey on suckers looking for quick and easy solutions. Since the companies charge a hefty fee for their services, they get debtors even further into debt.

There are two simple ways to improve your credit score. One is to pay your bills on time. The other is to not have as many debts. If you don't have many creditors, it is easy to handle what debt you have.

I give that advice often. I then watch people's eyes glaze over.

If I were to turn evil and offer them an easy credit fix or a payday loan, I'd become a billionaire.

It is not easy to get people to take a hard look at themselves. Addiction to credit is like addiction to anything else: people usually won't get help until they bottom out.

When people with poor credit get themselves together, they often get amnesia about what got them in trouble. They make the same mistakes over and over.

That is not amnesia; that is insanity.

Don McNay, CLU, ChFC, MSFS, CSSC is one of the world's leading authorities in helping people deal with "Big Money" issues.

He is currently on a book tour for Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery.

McNay is an award winning, syndicated financial columnist.

You can read more about Don at