Many people have problems with credit – some of those problems relate to not understanding how it works. Patrick Ritchie is the author of The Credit Road Map, which details how to navigate the world of credit. This book is a must-read, no matter whether your credit is good, bad or average. It can help to stop you damaging your credit.
NewsBlaze: Hello Patrick. I understand you used to give classes on credit but you thought you could do more to help people. Why did you write “The Credit Road Map“?
Ritchie: I wrote The Credit Road Map because there was a definite need for a reference book consumers could use to guide them through the world of credit. The classes I have taught were a good source of information, but the reality is that a person is only going to retain a small portion of what they hear in class. The problem was that people would remember a portion of what they heard and then when it came to practical application they could not remember the whole answer or may have pieced things together incorrectly. The book provides all the information someone needs to navigate the credit world and with the book in-hand it serves as a perfect resource.
NewsBlaze: There is a lot of information available about credit. What is different about The Credit Road Map?
Ritchie: The purpose of The Credit Road Map is to explain a subject that most people do not fully know or understand. Many people seem to know something about credit, but few know all the information necessary to control their credit. This is your detailed plan to progress toward high credit scores. In return, high credit scores save time, money and energy.
NewsBlaze: Does the book have advice only for people having credit problems or is there useful information for a wider audience?
Ritchie: For those with average credit:
For those with less than desirable credit:
For those with above average credit:
NewsBlaze: What is the main thing you want people to take away after reading the book?
Ritchie: If there is one thing I would want people to learn, it is how important credit cards are to the overall health of our credit scores. Credit cards have been the devil to many people, but by harnessing the power of a revolving account and using the cards wisely, people can get the most out of their credit scores.
NewsBlaze: The book shows that credit cards have a big impact on our credit score – what is one of the main points?
Ritchie: In Chapter 2 there is a discussion of the breakdown of the credit scoring model. It points out that 80% of our credit scores can be ruled by revolving credit cards. Namely because a credit card is an indefinite account, it has an infinite life unlike an installment loan that will be paid in full and close at a point in time in the future. The common theme to people who have an 800 credit score or higher is that they have had credit cards open and active for over 7 years.
NewsBlaze: So it can be bad for your credit score to close a credit card?
Ritchie: There are several reasons why this has a significant impact, but if people just realize there is absolutely no benefit to their credit score by closing a credit card, I would be happy. The world of credit is so multifaceted, but we have to remember a credit score is only as good as the availability of open accounts to gauge our likelihood to repay our debts.