Home > 2016 > Credit Score

Is Bad Credit Contagious?

Advertiser Disclosure Comments 0 Comments

If your credit’s not so hot, it could have something to do with the people you hang around with.

Not directly, of course. Credit histories don’t get merged. So, unless you’re co-signing for a loan or, say, taking out a mortgage with someone, your friends can’t exactly affect your credit score. But their attitudes toward money could be influencing your own. That happens in a couple of ways, according to Amanda Clayman, a financial therapist based in New York.

“We form our frame of reference for what is normal based on the people that we’re in contact with … so that skews our thinking about what’s appropriate,” Clayman said.

Think of “keeping up with the Joneses” as an example. Your friends are all spending money on product X, so you want it as well and you might not take into account your own financial circumstances and how acquiring that product might affect your money situation.

Take that one step further, where your friends are maxing out their credit cards to get product X, and you may think nothing of doing the same. If that seems like normal behavior, it could become a major financial problem.

“Also, think of the ways that we use our friendships in a broader sense,” Clayman said. “One of the main functions of friendship is to be emotionally soothing when we get anxious or upset, so sometimes friends might — with the objective of being encouraging and supportive — inadvertently cause us to do things we really shouldn’t do.”

So, if your friend is encouraging you to go on a shopping spree as retail therapy for your recent breakup, it might feel good at the time, but that credit card debt isn’t going to feel so great when it comes time to pay your bill or it lingers for months at 23.99% interest.

It’s an argument for improving your circle of friends and looking for people whose lives you want to emulate.

“Friendships don’t just have to happen in our lives,” Clayman said. “Certainly we feel an authentic connection to some and not to others, but it’s something to keep in mind when we meet a person we really admire: ‘I’d like to be closer to this person and hope that it has an effect on me.'”

It’s like motivational speaker Jim Rohn said: “You are the average of the five people you spend the most time with.”

“It’s sort of like people who build good teams in business who say they hire people who are smarter than they are. It takes a strong ego and being a secure person, but that is how we can maybe set ourselves up to grow,” Clayman said.

Friends can also influence your spending habits by simply wanting to hang out with you, doing something you might not be able to afford at the time. It’s hard to tell your friends you can’t afford to do something, but honesty is always the best policy. Instead of charging the expense, consider letting them know that you need to decline because it’s been a tight month or that you’re saving your money for something bigger.

If you hit upon seriously hard times and one of your friends offers to lend you money, it can be a good idea to politely reject the offer. The consequences of you not being able to pay it back may be too high and you don’t want to strain your friendship. Unless you are willing to potentially break a friendship or you are guaranteed to have the cash to pay them back in full, consider just saying no. It’s a good idea to not be the lender, either, but if you have to, here’s a guide for the best ways to loan money to friends and family.

Remember, the best way to reduce the influence your friends might have on your money is by creating a budget and sticking to it. Running up high credit card bills or running out of money because of nights out or vacations can have very long-term effects on your wallet and your credit score. You can see what your debt will cost by using this lifetime cost of debt calculator, and you can see how your debt is affecting your credit by pulling your free credit report summary on Credit.com.

When it comes to your friends and money, it’s always a good idea to be honest and stick to your financial goals. By saying you can’t afford something, you could be helping out a friend who’s also been struggling to keep up and will be relieved to cut back a bit.

More Money-Saving Reads:

Image: wundervisuals

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team