Stocking Up On Credit

As per my post yesterday, looking at your credit score can be a really good idea at least once per year. There’s nothing worse that not getting the credit when you need it or in this age of identity theft, getting a nasty surprise call from the bank. But, is that always a good time to get credit – only when you need it?

In the past - when I used to be broke - sometimes I needed a bit of extra credit, but unfortunately, I was at a stage where no one would give it to me (actually, in retrospect, that was probably a good thing!)

I also hear stores of people losing their jobs suddenly or something unexpected happening in their life and when they go to get some extra credit from the bank, they get denied.

Or, there’s nothing worse than an amazing investment opportunity arising and you don’t have the money. In these situations, time is of the essence and you sometimes don’t have the time to wait to qualify for that line of credit or extra borrowing.

This is why I don’t stock up on credit when times are bad – I get credit when things are going well. It kind of sounds counter intuitive, but when the times are good, banks will be more than willing to give you a line of credit or bump up the balance on your current credit card.

So, I not only review my credit periodically, I also review my current accessibility to debt. I want to make sure that if something goes wrong, I can quickly access a line of credit if I need it.

Obviously, it’s good to have an emergency fund, but I’m not sure I’m crazy about cash sitting around in a bank earning minimal interest. I’d rather have it working somewhere else making higher returns. Unfortunately, you can run into a situation where, if the money is invested, you might not be able to get it as quick as you may want.

Currently, I have several lines of credits just sitting around waiting for the time when I really need them.

Also, since the economy is going down, I am waiting for the opportunity for some great investments to be around the corner – people desperate to sell their condos, or a great deal on a stock that is not doing so well.

So, don’t just get your credit score in order, take an inventory of your credit, and top up what you can access … just in case you need it.

But, there is a caveat – this strategy, does require a bit of will power. If you aren’t strong enough, there may be the temptation to rack up all that extra debt.

So make sure you just keep that extra available credit for a rainy day – you’ll want to make sure you’re ready to weather any storm or to pounce on a really great investment if it arises.