I hear from people all the time who are obsessed with their FICO score. “I just gotta get my credit score up!” Have you heard people say that? Is that person you? You open up a credit account because you “need” to build credit. There is this stigma in the world that your value as a person is tied to your credit score. People generally feel terrible when they have a bad credit score. You hear someone tell you “you can’t buy a home without a (good) credit score, you can’t rent an apartment without a credit score, you can’t qualify to buy a car with a special interest rate.”
This stigma is wrong! FICO scores are just a measure of how much debt you have (or had), and how likely the bank would be willing to lend you more money. They look 5 things: how much you debt owe, how well you pay on the debt, the different types of debt you have, how long you have had debt, and any new debt you have taken on. You know what the common theme in that paragraph was? DEBT.
If you didn’t have debt, what would your life look like? What would it look like if you started living your life and not living life to impress other people? The problem about the world valuing you as a person through the eyes of your credit score is that they don’t really care about you. They look at you as a risk.
There are ways to rent a car, rent an apartment, or buy a home without having a credit score. Manual underwriting exists and you need to find a broker who specializes in this field.
Credit card companies also know that people are enticed by rewards programs. Frequent flyer miles are attached to credit cards to encourage you to overspend. I once heard someone tell me that they wanted to pay off debt and then turned around in the same session saying, “I will be traveling a lot to see family. Maybe I should get a credit card with frequent flyer miles?” NOOOO. We are going the wrong direction!
Everyone is out to get your hard earned money. It is up to you to protect it at all costs. We need to change our mindset to reflect different values. Do you disagree? I would love to hear from you.