It’s been awhile since I’ve highlighted an article to point out what NOT to do, but I came across one today that was screaming at me to broadcast it’s ridiculousness. Let me pay a compliment to the authors, Ray and Dana Brandon, and say that they have good writing skills. But the advice in the article? Toss it! This couple is basically saying that having a high credit score is not a goal to aspire to because all it really means is that a consumer has borrowed then repaid tons of money. To quote one of my favorite Vince Vaughn lines, “Erroneous! Erroneous on both counts!” Well, check out the Memphis Daily News and give it a read and see for yourself:
“What’s your credit score? I say, “Who cares!“ A great credit score simply means you have successfully borrowed and repaid a lot of money. Which in turn means you are great at loading on debt. That’s not exactly a goal to aspire to.
Your credit score says absolutely nothing about your financial security or success in achieving your financial goals. It doesn’t take into account your income, net worth, retirement accounts, investments, or your ability to live within your means. It’s a metric for lenders that focuses mainly on your payment history and the amount you owe; with the length of your credit history, the types of credit or loans you use, and how much new credit you have recently sought all playing a role in the total score.
If you are one of the many obsessing about your credit score, you are worried about the wrong thing.”
Click here to continue reading about the Brandons’ take on why a credit score is not a worthy goal.
Now, if you know anything about finance, you know that there’s more than one way to get a great credit score. It actually most definitely does NOT mean that you’re racked up a huge amount of debt, because accruing too much debt actually bodes poorly for your score. It means that you’ve paid bills on time, made car payments, mortgage payments, and student loans on time. You do not have to have high consumer debt in order to get a great score, and if somebody was “great at loading on debt,” as this article puts it, their score would in turn suffer because scores are partially based on the difference between the amount of credit granted and the amount used. And if a lot has been used, it’s no bueno. So this is one article to toss this week, and it just goes to show, don’t believe everything you read– even if it’s in a newspaper!
