My Credit Score

In my drafts folder, there is an unpublished post from several months ago where I say that I don’t care that much about my credit score.  My point was only that for the immediate future, I was going to make my financial decisions not based on how they might affect my credit score, but how they would help me get out of debt and set me up for long-term financial health.

In most cases, those two things are not different, but I was thinking specifically of things like closing credit cards or reducing my credit card limits.  People sometimes overreact, especially to closing accounts, because it may mean a short-term hit to your credit, but I don’t want to have three credit cards open with $20,000 in available credit.

My credit score didn’t seem like that big of a deal to me, because it was in a place where it could only go up and I was not planning on borrowing money for several years.

I still have the same general concern more for my long-term financial health than what might temporarily reduce my credit score by a few points, but a few things have changed the way I think about my credit score.

1. I was too much under the influence of Dave Ramsey, who doesn’t care at all about his credit score, because he’s a millionaire who owns his own business and pays for everything in cash.  I agree with Dave that we have a messed up system if your financial health is measured by how much money you’ve borrowed and paid back, rather than your actual net worth, but I’m not in the same position as he is to completely buck the system.  I never want another auto loan, but I do want to buy a house one day and I want my credit score to get me a good interest rate.  In the meantime, I’m a renter and once I’m no longer living in student housing, my credit score could make or break me getting an apartment.  I had completely underestimated the number of circumstances where my credit score might come into play.

2. I think the reason I didn’t want to think about my credit score was because I was ashamed of it.  More than even my debt, my credit score represented my total failure.  It’s one thing to have debt with accounts in good standing, but I had three times been late with student loan payments, so my report showed delinquency.   At a certain point, I was extremely paranoid that someone in my family would pull my score (without my permission) and know that I was in trouble.  This paranoia of mine actually changed my political views on the privacy of personal information. Now that I’m in a better financial position, I feel more comfortable talking about my credit score and even just thinking about it myself.

3. I seriously underestimated the way it would make me feel to see my score going up.  It started on the low end of poor and now it’s fair and bordering on good.  I was so ashamed of having messed it up and seeing that score improve has lifted all of that fear that someone was going to find out I’d been so irresponsible.  It’s also made me way more optimistic about getting that apartment in the future or that mortgage.  It has the power to open doors that were closed, even if I won’t be walking through most of them. I didn’t expect it to improve so quickly.