I Have a Credit Score of Zero…And I Love It!
If you ever want to hear a good story, talk to a financial counselor. I know an individual who happens to be one and he told me the story of a woman named Beatrice. Beatrice’s father told her from a very young age that it was very important to protect her credit score. She had called my friend the financial counselor and told him that she had not eaten in two days; however she made all of the minimum payments on her credit cards. Those are some seriously screwed up priorities. Americans have been indoctrinated to worship at the altar of the FICO score, and it’s time for that to stop.I have a credit score of zero, and I love it. A few weeks ago, I tried to pull my FICO score from Fair Isaac, and they told me that my score was so low that they could not even calculate it because I have not had any credit activity in over a year. The error message even went as far suggested the reasoning for this is that I might very well be deceased!
How did I attain this very low score? I do not borrow money, period. I have accepted that ‘no’ is an acceptable answer to my wants and that if I do not have the cash to buy for something I simply cannot afford it.
At this point many will be asking, “Don’t you need a high credit score to get a home loan, automobile loan, get a credit card or rent an apartment?” In some cases yes, but I don’t borrow money; I don’t mind explaining to the apartment manager that because I’m not deeply in debt I actually have money to make my rent checks. The only thing that a high credit score enables you to do is get deeper into debt. No one wants to be thousands of dollars in debt and in a very deep financial hole, but so many people do it because they have fallen for the myth that you need to have debt as part of your financial life.
The only way to have a high credit score is to be in debt for great amounts of money over long periods of time. This isn’t exactly a winning financial plan. The FICO score is based on your debt payment history, your amount of debt, the length of your credit history, the types of debt that you have and any new credit that you attain! As the famous financial counselor Dave Ramsey puts it, a “credit score is an I love debt score”.
Does my FICO score of zero indicate that I couldn’t repay a loan, or that I am somehow not good with money? Of course not, it indicates that I don’t owe anyone in the world and have not for a long period of time and that I actually have some money. You can keep your FICO score!
Regardless of your current Credit Score, if you choose to have a Credit Card, be sure to do your due diligence. Compare Credit Card Offers and read the Credit Card Company’s policies for Annual Fees and high interest rates.
Labels: credit score, Matthew Paulson
posted by Matthew Paulson @ 11:37 PM
16 Comments:
If you don't care to borrow money, then a credit score has no meaning whatsoever. It wouldn't matter if you had multiple bankrupcies. If you never cared to borrow money in the future, then your credit score doesn't matter.
Credit scores are not a myth, however. What a high credit score tells lenders is that you have a history of repaying debt on time, so you are a good risk if you ask them to borrow money. You don't need to be, or ever have been, in heavy debt.
I have an excellent credit rating because I spand almost 100% of my money using credit cards that I repay in full every month. I don't carry debt from month to month, and don't spend more than I have - I just choose to spend using credit cards rather than cash.
If the need to borrow money ever arises, I know that, not only am I good risk like the author of the article may be, but others will know it as well.
Sadly, credit scores have become so ingrained into American culture that some employers now use them as part of a pre-hire background check.
I agree with this in prinicple, but until I own a house outright, I still like to keep my credit score high.
Nice looking blog.
That's got to be one of the most misinformed articles I have ever read!!!!
Dude,
CREDIT = GOOD
Misuse of CREDIT = BAD
Im curious, Why were you looking at your Score if you thought it was basically useless and stupid?
"The only way to have a high credit score is to be in debt for great amounts of money over long periods of time."
That is complete BS. I have an excellent credit score, and I've never paid a penny of interest in my life.
I hope the author of this article lives in a small town where a smile and a handshake is enough to get a mortgage, because in the real world a blank credit report will get you screwed if you ever need to borrw money for any reason (including buying a house). Good luck even getting approved for a cell phone.
I hope you don't drive a car because you would have to pay 2x as much as someone with an average score with no credit.
Same with a home. Even if you save enough to buy a home outright, your homeowners will be 2-3x as much also.
Interesting how you can be running a blog on how to "become a millionaire" and have no idea about the concept of leverage.
These people love you.
http://www.fatwallet.com/t/52/699516/
Yeah, I've had about 400 people come to this site in the last day or so from Fat Wallet. It doesn't bother me that they think I'm crazy, sometimes I think I'm crazy too.
But really, you don't need a credit score, the purpose of this article is to diffuse some of the "credit score lust" that is plaguing society. It seems like some people make the credit score seem much more important than it is.
FatWallet has a crowd that is very educated about credit scores. It also has a crowd of people that spend money like it is going out of style. The people that took the time to post on here about it want YOU to know that you are oversimplifying Credit Scores.
Just because YOU don't need to borrow money and just because YOU don't understand how credit scores are caculated and YOU don't know how YOU can benefit from them DOES NOT mean you should go around posting mis-information about credit scores.
If YOUR site is trying to offer finicial wisdom to YOUR readers, you are doing them a diservice.
Being IN debt is NOT the best way to get a good score. The BEST way is to have open lines of credit (like a credit card) that you use for daily purchases and pay in full each month.
You posted about saving $400/year by not drinking soda. Do you eat food? drive a car? If you use credit cards that offer 5% cashback on grocery/gas/pharmacy purchases when YOU spend 25% of your income, you may be suprised who quickly the "savings" rack up. Do you fly? Discover Card is currently offering 5% back on Airplane Tickers. Do you have a phone/internet/cellphone/cable bill? Citibank offers a card that gives you 6% cashback on these "technology services".
You have over-simplified a topic that your clearly know nothing about. This is clearly a dis-service to your readers.
What happened to morals and respect? If you don't agree with the author then don't trash them with a disrespectful mouth. If you're going to disagree with them then atleast state that you disagree with them in a mature fashion. Sorry if I offended anyone with this but I felt like it needed to be said.
I understand what you are trying to pass along to others, but then there is reality.
In reality, which is the world I live in along with everyone else has certain rules. A few of those rules you have to go by if you want to be successful. Sure you can buck the trend, but by following certain rules you can succeed most of the time.
If you have good credit you can get loans easier, you can get lower interest loans and you can get a larger loan than individuals with lower scores.
As one of the last posters wrote, when you use credit you can actually get cash back. You don't normally get a discount if you pay with cash.
Also you stated that people are going in debt to get higher credit scores. Well maybe you should do some more investigating and you would find out that most millionaires are in debt, but they utilize that debt to create greater wealth.
The old saying it takes money to make money is too true. If I can borrow $50K to $100K at 0% or near 0% interest and invest it making a guaranteed 5%, even after taxes and inflation that's a net gain. If I try really hard I can work that number up to an easy 7-9%.
Using money to go into debt is a tried and true method of not only increasing your credit score, (assuming ontime payments etc) but also making money and becoming financially independent.
Your article was funny to read, informative... no.
This article and many other entries in your blog are ridiculous. You lack any sort of understanding about credit or the responsible use of credit.
I agree with "Anonymous" and all the other bloggers. I hope people who have read your article has also looked at other credit "advice" postings because they will be seriously screwed if they take your naive advice at face value. I guess you are planning on paying for a house and a car in cash and prepaying for your cell phone. Or maybe you live in a forest somewhere in a homemade log cabin in the 19th century.
No offense, but it seems a little disingenuous to retell stories from Dave Ramsey's radio show or Financial Peace University and refer to them as stories from "your friend the financial counselor". If you find value in Dave Ramsey's information and content (which I do) please credit Dave Ramsey; rather than assume that we've never heard the it before.
Post a Comment
Subscribe to Post Comments [Atom]
Links to this post:
Create a Link
<< Home