Emergency Fund vs Good Credit

I am interested in opinions on this subject…

Which is better to have money in an emergency fund or use your funds to pay the past debt owed and have good credit?

My dilemma is, if I use the money I have and pay my past debts off, I’ll have good credit and no emergency fund for car/house repairs, funeral costs or mortgage.

If I put the money in an emergency account, I’ll have money if needed and bad credit. Not sure which is better.

We have only SS disability income. Thanks for your advice.

I recommend taking a balanced approach, but that is just my opinion.

Maybe consider splitting it up and paying off a good chunk on a credit card and putting some in emergency fund.

Obviously, you need to at least make the payments on time on your credit card but at the same time you want to have cash on hand in case something goes wrong that was unexpected.

In my situation, I have been paying off my cards in big chunks but at the same time I have an emergency fund and then had another account with funds that I was going to use to pay off a credit card but was waiting a bit just in case.

I ended up having some car trouble and that helped me to not feel the expense too much.

When it comes to a “credit score” while having a high one is good, it is also not the end of the world if it is lower. (Unless you are needing to rent an apartment or purchase a house or something) Having a lower credit means you are limited on some things which could actually be good at helping to keep your finances in check.

Like I said, these are just my opinions, but I have had to face some similar questions recently and I am trying to take the most balanced approach possible.


@moore.income Thanks for your reply. I have no credit cards, only a student loan. I like your idea though of doing both.

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I would say to do both. I don’t have a lot of money right now. i’ve never had a lot of money. I would say that anything you can set aside for an emergency fund or something is a good step. then anything extra you can pay on debt is also a good step. the average family in the US is one paycheck away from being homeless, and the average family in this country could not survive a $500 emergency wo serious problems. so just think ab that. tighten the boot straps where you can.

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I have had the best outcome with making the minimum payment on the debt/credit card and throwing any extra funds towards my emergency fund, while trying to build it as quickly as possible, so I’d have that cushion and don’t have to fall back onto that debt/credit card. It helped not to need my credit for anything in that time-frame, so once I built my emergency fund I redirected the extra funds to the debt/credit card and boosted my credit back up.

I got REALLY creative trying to “find” extra pennies to help out.

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WEN DEE if your disable and they are student loans
you can get a wavier and not have to pay the debt
back. I know this isn’t the greatest thing to do but
my hubby had to do it. He couldn’t get any loans
or have any credit cards for 3 or 4 years but he
is disable and can’t work.

@bonnie.squires I did start the process to have my main loan discharged and am working on paying off the smaller loan. Thanks

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WEN DEE your very welcome