I’ve been reading lately both about American history and the establishment of the National Bank, and the loans tried to be negotiated with the Dutch banks during the Independence War. At the same time, I’ve read a lot of folks having their Credit score lowered because of paying off either their cars or their student loans. Shouldn’t it be better if you didn’t ave any loans at all?
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So a credit score (at least in the US) isn’t a measure of financial responsibility, it’s a measure of financial reliability. That is, a person with a high credit score is someone businesses can rely on to make purchases and pay them off. It’s similar, but not the same. A credit score shows that you are participating in the economy. Someone with no economic activity, while individually well off, may not have a high credit score.
On a nation scale, debt is also good there, as taking on debt is a reliable and efficient method to fund growth. As long as that growth outpaces the interest, then taking on that debt leaves you in a better place, long term. It takes debt to build a business, or a power plant, or factory, but that’s all good debt, because you funded something that will pay for itself eventually. Without taking on some debt, economic and social growth becomes significantly harder. We live in an economic system that demands growth, where stagnation is equal to failure and collapse. It’s not a stable system, nor is it as practical one long term. But it’s the one we’ve got.
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