Having a good credit score makes life easier. You can borrow money easier than someone who has bad credit (if you really want to do that), you will have an easier time renting, you might pay less for insurance, you don’t have to worry about employers or potential employers labeling you or not hiring you if they run a credit check, etc., etc., etc. There are many perks to having a good score. However (and it is a BIG ONE), what is the REAL value of having a good credit score? I devoted an entire chapter of my book to this topic, titling the chapter, “I Don’t Care About Your Credit Score…and You Shouldn’t Either” to make it obvious my stance on the issue (and to rile up a few people who want to argue the point).
I do not care if you have good credit or bad credit because credit is not the target I’m aiming for. I’m aiming for freedom. Also don’t misunderstand me and misinterpret what I’ve written thus far to mean I don’t care about your credit report. Your credit report is VERY important because it is a public record that provides all sorts of information…and a lot of the time it is wrong. So while this article isn’t about correcting inaccuracies on your report, please make sure you do so. I may write about that later to give you more details.
Having a good (or bad) credit score does not make you a good or bad person. I know plenty of very good people who have terrible credit. I also know plenty of horrible, rotten people who have stellar credit ratings. Despite what society wants you to believe, you won’t go to hell if you have a bad credit score – I promise. Let me give you the secret of this whole thing: if you do what you are supposed to with your money, your credit score will take care of itself. Let me prove it.
According to Fair Isaac, the people behind the FICO Score, your score is based on the following:
- Payment History (35%)
- Amounts Owed (30%)
- Length of Credit History (15%)
- New Credit (10%)
- Types of Credit Used (10%)
Notice a common thread? To have a good credit score, Fair Isaac actually admits you to have and use debt! Let’s put it another way. If you are 100% debt free and have zero payments, your credit score will not be as good as someone who has lots of debt and pays payments every month (all other things being equal). As someone who lives life under the guidance of Romans 13:8 (“owe no man anything, but to love one another: for he that loveth another hath fulfilled the law.”), it is extremely difficult for me to also tell you to go out and work on improving your credit score.
Instead, here’s what I want you to do. If you’re behind on bills, catch up. If you’re not living on a budget, start TODAY. If you’re unable to make your situation work financially, make whatever changes are necessary to get things back in line. Do not pick up the chains of bondage that accompany a payment book. Do not buy the lie that your credit score is the answer to making all your financial dreams come true. Consider actually saving for a major purchase rather than financing it. In short – behave with your money! Your credit score will take care of itself. So repeat it with me, “I don’t care about my credit score.” Again: “I don’t care about my credit score.” Again: “I don’t care about my credit score.” After saying it a dozen or so times, it won’t sound nearly as strange and hopefully you will recall it next time somebody tells you that you must have a good credit score to do ______ (insert task here).
Want more? In this space I can only scratch the surface of the issue. Before arguing with me until you turn a lovely blue color or your head actually explodes, consider buying my book and reading all about my stance on the issue. Then come back and disagree all you like.