Enough With The Obsession With Credit Scores

I'm not sure what I did to deserve all these wonderful PF bloggers knocking down my door to guest post for me… so just want to say a big “THANKS!”.  Financial Uproar is one of my favourite blogs because he tells it like it is and he's laugh-out-loud funny (especially when he does his Saturday Link Dumps).  

Hey, I don't mean to be a downer, but, what do I care? This isn't even my blog.

Did you know that, without a decent credit score, your life is basically over? Yep, it's true. If you need confirmation, just check around the personal finance blog-o-net. I'll save you the time, since there are approximately 65,342 (author's estimate) posts written on the subject. So yeah,  I kind of think having a high credit score is very, very important. (If you don't know what your credit situation is, just shut up and use our free Borrowell credit score to see exactly where you stand!)

Of course it is. People with low credit scores will have difficulty getting any sort of credit. They can forget about a mortgage or any sort of unsecured line of credit. Even getting a credit card with a limit higher than $500 is difficult without a decent FICO score. And, to top it off, even potential employers will have a look at your credit report. Your crappy credit score could even make you lose out on that dream job.

Credit Score Pictures, Images and Photos

But fear not, for all is not lost! Did you know that there are websites that you can check your score for free, every few months or so? What's that? You do, because it's been mentioned in each of those 65,000 articles? Well, never mind then.

I'm going to go a different direction with this guest post. I'm going to list the reasons why you shouldn't sweat about your credit score. I'm all about freeing up time for things that are important- like hitting on Y&T even though she clearly has a boyfriend. He probably wants to fight me. I can't say I blame him.  (Editor's Note: LOL but we're internet boyfriend and girl friend so it doesn't count of course.  Doesn't everyone have an internet girlfriend/boyfriend? KIDDING)

A High Score Isn't That Hard

Let me tell you all a story about my credit report.

Back in 2008, I decided I was going to go ahead and buy a house. In the process of applying for the mortgage, I got to see a copy of my credit report. My score was 802. (Editor's Note: Dang boy!! That's high!  I think mine was 780 or something though I did have lots of credit cards but paid them all off regularly)

How did my score get so high? Did I use the credit building tricks I've read so much about? Nope. In fact, I did some things I wasn't supposed to do. I applied for a credit card just to get the free Blue Jays t-shirt, promptly cancelling that card a few months later when the bank asked for their annual fee (which I never did pay). The credit card was never used. That's not so good for your credit score.

During that time, I only used one credit card. It's the same credit card I've had since I was a much younger man. It's the only card in my wallet, and it gets paid off in full. Every. Single. Month.

I have also never had a car loan or any other installment loan. Credit gurus commonly tell people to get a loan of this type and at least make some progress on it, which will increase your FICO score.

The point of all this? By being smart financially and by using credit responsibly, I have a great credit score. And the best part is, I didn't even try. You can accomplish the same thing, just by not being a dirtbag.

The Consequences Aren't That Bad

What are the three most common consequences people say about not having a card?
1. You'll pay more for debt. (assuming you can even get it)
2. You'll have difficulty renting a house or getting insurance.
3. You'll lose out on your dream job.

Well, I've got good news for some of you. You can quite easily exist without a great credit score.

Think about all the people you know who have too much debt. Some of them got into trouble by loading up on so called “good debt”, financing things like their education or a house. Most of them though, have some sort of ill-advised consumer debt. There are millions of people in North America who would have easier lives if they never had any access to credit.

Now that's not saying credit is bad. credit isn't necessarily good or bad, it's what you do with it. All sorts of people exist without using credit whatsoever. All sorts of people would love to have never seen credit cards. These people might even go as far as cutting up those cards once they pay them off. Credit may seem like a necessity, but it isn't.

As for the house, insurance and job arguments, realize one thing. Many landlords and companies will check credit reports. Many more won't bother. If you can avoid renting a house from a large scale landlord, you can probably avoid a credit check. It's the same thing if you go work for a small, family owned company. All sorts of companies will screen potential employees with a criminal records check before they ever do a credit check.

Although credit makes it easier to live in today's day and age, it's not vital. Food, air and shelter are true necessities. Credit is not. I'm not saying you should intentionally screw up your credit. I am saying living without it isn't the end of the world.

Identity Theft Is Really Rare

In 2009, the RCMP received identity theft complaints from 11,095 Canadians. Wow, that's the population of a small city! That's a lot of identity theft, which is why everyone should be checking their credit reports regularly. Identity theft is a real threat!

Except it really isn't.

During that same year, RCMP recorded 443,000 violent crimes across Canada. That means that the average citizen is 40 times more likely to be beaten up in a dark alley than having their identity compromised. Heck, you're 3 times more likely to get robbed than having your identity stolen. (Especially in Winnipeg. Click the link if you don't believe me. Oh yeah, Winnipeg sucks.)

What steps do you take to avoid being the victim of a violent crime? Like most people, you use common sense. You stay in well lit areas at night. You don't spend a lot of time talking to drug dealers. And, just maybe, you should take the same approach with your credit score while checking it regularly free of charge.

9 Comments

  1. RossTaylorMoney on October 12, 2011 at 3:48 pm

    Oh Nelson, we were starting to get along so well, but…….. I have written several of those 65,342 posts.

    Gail Vaz Oxlade has been on the rampage recently against the credit score – so you have at least one Personal Finance expert in your camp.

    On the other hand, I fervently believe in maximizing your credit score at all times – and could provide you with hundreds of examples of how I have helped people do that, and how they benefited from it.

    It’s not that what you say is wrong, in fact you make some valid points. But you just scratched the tip of the iceberg.

    I guess I’ll stir up the pot a bit and post a lengthier ‘reply’ – probably tomorrow.

    It’s all good.



  2. RossTaylorMoney on October 12, 2011 at 3:51 pm

    Having said that, I survived and bobbed and weaved just fine when my own score fell to a disgusting 463 many years ago, but life is a lot easier now that it’s high again.



  3. youngandthrifty on October 12, 2011 at 9:22 pm

    I think my BF’s credit score was higher than mine when we applied for our mortgage and I was kind of astounded.

    He always forgets to pay his bills (he has the money but just forgets/ procrastinates etc.). I think it could be due to the fact that I have many cards under my belt (what can I say, I’m a credit card points whore).

    But yeah, I’m not obsessed with the credit score only unless I want something and I already got approved for that so I don’t really care about it until 4 years later when we’re set to renew our mortgage again.

    Thanks for the guest post, FU! I appreciate it and always dreamed of you guest posting on my blog 😉



  4. YFS @ YourFinancesSimplified on October 12, 2011 at 10:57 pm

    I lol’d at this statement “You can accomplish the same thing, just by not being a dirtbag.” The same can be said of anything really. Stop doing X and Start doing Y and you get Z. But if everyone had common sense there will be no need for PF bloggers or gym memberships etc etc.. Nonetheless, great post.. it was wildly entertaining



  5. T.M @ My University Money on October 13, 2011 at 8:08 pm

    Awesome “back to reality” column! Although I am slightly upset that we are not the only ones that like to flirt with Y & T online (but not surprised). Love the violent assaults stat, and as a someone who has lived in Winnipeg, I can absolutely say that reported crime is likely not even a majority of what actually occurs, so put that in context.



  6. young on October 14, 2011 at 3:18 pm

    @T.M.- haha, Hey T.M. Don’t be jealous, you’re the one who’s secured a ‘staff writer’ position at Y&T! 😉



  7. young on October 14, 2011 at 3:29 pm

    @YFS- Yes, Financial Uproar’s writing is definitely worthy of LOL moments 😉 He’s a whole bag of entertainment.. he IS “all that and a bag of Doritos chips” (har har har!).



  8. John on October 15, 2011 at 12:30 pm

    I think the more important problem is consumers focus so much on the FICA credit score that they do not focus on the more important problem of financial success. No they do not go Hand in Hand. I know high income individual with 550-650 credit scores and live quite nicely. If you are a first time home buyer, sure you have to have a 650+ credit score to get a decent interest rate, but come in with 20-30% down in cash, most banks will love you regardless of your credit.

    Shameless Plug! vanwinkleinsurancegroup.com/



  9. young on October 18, 2011 at 11:26 am

    @John- LOL your shameless plug landed you in “SPAM” so I rescued you. Very true- if you have 20-30% down banks will be happy to lend you money.



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