Credit scores and credit bureaus and FICO look like a three-headed monster living under your bed. Pull back the covers and see if you even care what your FICO score is this month.
So why does the average consumer worry so much about his credit rating? Brainwashing.
Simple. We have been taught to buy first, and worry about how to pay later.
5 reasons why your FICO score is a false idol:
1. FICO Does Not Cover Your Expenses.
Credit is worthless if your bills are covered by your income each month. If your income falls short, you have bigger problems than a low FICO score.
2. Out of Your Control.
No matter how many credit repair books you read, it is hard to raise your score except by paying your bills on time. And even then, which bills you pay can have more to do with your score than how much you pay.
For example, your wife pays the landline phone, and you pay for the cell phones. Her score goes up, yours does not. You might write the checks for everything, but if the right bills (mortgage, electric, phone, gas) are in your wife’s name, she gets the FICO boost.
3. Inaccurate and Incomplete.
Credit scores are dry mathematical formulas. No real human contact. Mistakes can live forever. Most human activities can only lower your score.
Income is not really a factor in the credit score algorithm. Get a raise at work and FICO does not know or care. Pay all your expenses in cash and become a credit ghost. Mistakes stay on your report forever. Even debt discharged in bankruptcy somehow lingers.
4. Mounting Debt.
All a high credit score can do is tempt you into taking on too much debt. For the person who lives debt-free within their means, a FICO score is worthless.
If you have a high credit scores, banks will flood your mailbox with offers to give you more credit.
Easy and credit should never come together in a sentence. How many products have you bought that you did not need just because financing was available.
5. Can’t Take Credit Score With You.
When your eulogy is read at your funeral, trust me, your FICO score will not be mentioned.
Wealth matters. Your credit score does not.
Eat, drink, and be merry, just not on someone else’s dime.
Live fully on the income you make. Upgrade your toys when you have the cash, not the credit.
Don’t lose a moment of your life to worry about a mathematical score your cannot control.
Discover more alternative financial strategies at Burn Down the Freaking Mission.
