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Almost never. Withdrawing funds from a 401(k) early comes with massive penalties (10%) and income taxes, erasing a huge chunk of your savings. You also lose the future compound growth on that money. This should be considered an absolute last resort.
Missed payments on joint accounts, high credit utilization due to legal costs, or financial strain from supporting two households can lower both parties’ credit scores significantly.
The most effective method is to pay down your existing balances. Even a small payment can make a noticeable difference in the percentage. Alternatively, you can request a credit limit increase from your card issuers, which lowers the ratio without requiring a payment, but this requires discipline to not spend the newly available credit.
No. A line of credit is debt, not savings. In a crisis, like a job loss, access to credit may be reduced or revoked. Relying on credit perpetuates the cycle of debt, whereas a cash fund provides true financial security without added cost.
The biggest risks are late fees, the potential to overspend beyond your means, and the complexity of managing multiple payments across different apps. Some providers also report missed payments to credit bureaus, which can damage your credit score.
