Comments on: Your credit score is not important – here’s why

By: Frank Gallina

Frank Gallina — Wed, 04 Nov 2009 20:12:15 +0000

I am 62 and had great credit until 2months ago. That great credit score kept me from making financial decisions which were in MY best interests and not the banks best interest.
Logic and math have to control not an arbitrary 3 digit number. So enjoy a good score but do not let it dictate your financial future because the bottom line is it is just a 3 digit number by which financial institutions make decisions but not a number you should make all your financial decisions by.

By: Kevin

Kevin — Sat, 31 Oct 2009 04:31:31 +0000

There are some other minor things which pop up from time to time where having a good credit score can help. One nice thing about having a good credit score was when I was moving into a new house. I had to call and set up the electric.

Well, if I had bad credit, they wanted a deposit equal to what would be two months of “average” use for the area. It would have been about $250-$300 out of pocket before they would turn on the power. It would get returned to me after 23 months of on time payments… or when I moved.

Since I had a high enough credit score, they waived the deposit. I’ll admit, it’s not a lot of money when you consider all the expenses of moving. But every little bit helps. And I also wasn’t prepared to pay such a large deposit (since my previous apartment had the utilities in the landlord’s name)… and it would had hurt me to not have that money around.

There are similar issues with cell phone plans and other utilities (except my local water company makes everyone provide a deposit regardless of credit). Having a good credit score can reduce your up-front costs for some things. It might not reduce your total cost over the life of the item (I will pay the same for my electric whether or not I had to deposit the money that I would get back later) but it does make it cheaper at the onset.

By: bigappledebtor

bigappledebtor — Tue, 04 Aug 2009 15:11:39 +0000

@ steve B. I think I mentioned that some jobs do care about how “financially responsible” you are. Like you pointed out yourself, your credit doesn’t have to be perfect, they just don’t want to see bankruptcy filings.

I’m not suggesting that because your credit score doesn’t matter, start paying your bills late and doing a bunch of other irresponsible things that will lower it. I’m saying that your score is unimportant when you are trying to get out of debt so don’t make decisions based on how it will affect your score.

@bob Brooks – I don’ t know what insurance you use but mine is not interested in my credit score. Just how long i’ve been driving and how many (if any) accidents i’ve been in or claims I have filed.

@ Dawn… i already made the exception for a house. I honestly don’t believe someone who is getting out of debt should be financing a car. It’s not that hard to pay cash for a used car (mine was 5K) and if you want a brand new one, save up for it in the meantime. I think it’s unreasonable to say the same for buying a house which is why I had a caveat about that.

By: SteveB

SteveB — Fri, 31 Jul 2009 05:31:38 +0000

Fact: If you apply for a government job where you may have access to sensitive information, you will need a decent credit profile. Not a perfect one, but one that doesn’t have any serious negatives. The reasoning is pretty sound, IMO: if you are having trouble with money, you would be a risky government employee, because it’s more likely that you could be corrupted with a bribe.

By: Jeff

Jeff — Thu, 30 Jul 2009 14:49:59 +0000

Dawn said “live purely on cash, never finance a house or car or get a credit card, your credit score doesn’t matter. But realistically, how many people can do that?”

Ummm…EVERYONE can realistically do that! The ONLY thing that should be financed is a house. Credit cards and especially cars are not worth going into debt for. I took a bus/rode a bicycle until I could buy my truck and it took only 9 months to do that. 9 months is not that long (its already August this year !).

I make less than 45K in the Denver area. I live in a great rented place. I drive a nice truck I paid for with cash. I invest my hard earned money and have more cash in investments than some people make in a year…all thanks to very hard work, sacrifice, and avoiding paying interest to some greedy bank. I have eliminated all nickel and dime debt vampires from my ledger and watched it grow.

You must have is discipline, do some planning, stop eating out, stop living beyond your means, don’t knock anyone up (or get knocked up) until you’ve sufficiently saved for/can afford a baby, and stop believing you “deserve” certain things at certain points in life. EVERYONE can do it, question is, are you willing to sacrifice for just a couple of years to lay a rock solid financial foundation that will serve you for years to come ?

By: Bob Brooks

Bob Brooks — Thu, 30 Jul 2009 00:06:18 +0000

Besides the fact that they use it to determine insurance rates as well as in many cases in employment hiring situations, a better interest rate will come in very handy as you attempt to get out of debt. As you improve that score, you open up opportunities to reduce interest rates. Plus, you never know when you might need the ability to borrow down the road. As long as we are in a finance based economy, credit scores are extremely important.

By: dawn

dawn — Wed, 29 Jul 2009 16:51:27 +0000

Well, like Jeff said, if you plan to live purely on cash, never finance a house or car or get a credit card, your credit score doesn’t matter. But realistically, how many people can do that?

Most people i know can’t afford to pay cash on a new car, and so yeah, they’ll look at your credit score when you finance a car, too.

I don’t like the Big Brother aspects of credit reporting bureaus watching my every bill payment any less than anyone else, but this is the world we live in. The whole credit-reporting industry was created to accommodate banks and other lenders who wanted a more quantifiable way to assess the risk that a given borrower wouldn’t pay his loan.

By: bigappledebtor

bigappledebtor — Wed, 29 Jul 2009 12:47:17 +0000

@ dedicated, I am yet to find someone that has not gotten a job because of a bad credit score. To my knowledge (and I might be wrong) unless you are going to be in charge of lots of money, companies only run a consumer report which does not deliver your credit score (i know because I requested a copy of what my employee was receiving when i got my current job). Your logic would imply that you need a credit card to get a job (otherwise no credit score) which is false. I think you have some other things wrong, my insurance agents were not interested in my credit score, they were interested in how long I had my license and if I had filed any claims in the past and whether or not I had received tickets. For an auto loan, yes your credit score affects your interest rate but isn’t the whole goal to try and avoid loans?

@ Charles and Jeff, I totally agree. It’s a debt score and they are selling a product. I think that’s why they try to convince everyone that is a very important part of your financial health. Like i said, if you are going to get a mortgage, it is definitely worth it to check what your score is and play the game to get a better score so you can get a decent interest rate. I think though, that if you work with a decent bank and your score is low because you don’t utilize much credit but you can show financial stability in other ways you’ll be ok.

By: Jeff

Jeff — Wed, 29 Jul 2009 12:16:32 +0000

I have a terrible credit score (testicular cancer @ 22, health insurance hadn’t kicked in at my new job yet !) and can tell you, it does not affect my life negatively. I’m also 27, single, debt free, live strictly on cash, definitely not buying a house after watching 2 of my single friends do it and the general upkeep of their houses has made them broke at the end of the month.

I love it when people get all defensive about that great credit score they have been cultivating for years- its basically a debt score that is pretty worthless at the end of the day. When they find out not everyone is envious of a their great score they automatically go in “if you have a bad score (insert doom scenario…)” attack mode. Thats who usually gets all outraged at the notion its not important in the overall big picture. lol.

By: Charles Gervasi

Charles Gervasi — Wed, 29 Jul 2009 01:29:11 +0000

I wouldn’t even pay them to find out what their score for me is.

It’s totally the negative sell. They say their product (debt) might not be right for you. You’re supposed to say “Yes it is.” Well, then, you need to work on your credit score. How do you do that? Buy more of their product. If you do it right, you’ll be able to buy even more of their product in the future.

I know other non-banking organizations are supposedly penalizing people based on credit score. We don’t know whether they really look at the score or just look for the absence of negative information. If they really count it against me that I don’t use loans, I’ll just have to live with that.

If it’s an aspect of who I am, then I want to be a nobody, at least according to the banks’ world view. If you want to be somebody in their eyes, go use some of their product.

Even NPR buys in to this baloney: http://cgervasi.blogspot.com/2009/07/even-npr-buys-into-banks-credit-score.html

Thank you for pointing out something that so many financial people seem not to know.