Credit Score Mania

Feb 6, 2012 by

Credit scores are a topic in seemingly about a third of the online financial articles that cross my radar. People write endlessly and obsessively about the minutiae of “if you do A, then the effect on your credit score will be B,” blah blah blah.

I’ll make a confession: I don’t know my credit score, and I’ve never known my credit score. Why? Because 1) I’m not paying money just to get my credit score, and 2) I can’t figure out how knowing my score is going to help me. The advent of Credit Karma has removed my reason #1, but I still haven’t bothered to get my score. To me, a credit score is merely a curiosity.

Why Scores Have Become Gone Mainstream

Credit scores have become trendy because a lot of companies have made a lot of money creating and selling credit scores. Through effective and massive marketing campaigns, these companies created demand among consumers for their own credit score. Americans are competitive and love to keep score, so credit scores have been an easy sell.

Yes, Your Credit Rating is Important

Absolutely, maintaining a good credit rating is important and will save you lots of money over a lifetime. That’s why I recommend that every adult download and read “Understanding Your FICO Credit Score,” published by the Fair Isaac Corporation, inventor of the popular FICO credit score. You can download this publication through the Free Downloads link at the top of this page, or through the link below. It’s full of tips on what to do and not to do to maximize your credit score. I think that’s all you need to know!

Score Obsession

I resist the pressure from credit score marketers (and, surprisingly, many personal finance “experts”) to consider first in every money decision the impact on my credit score. Credit Karma even offers a simulation tool you can use to “optimize” your credit score. I’m not saying this tool is useless, but to the extent it encourages people to make money choices based solely on credit score impact, I think it’s unhelpful.

To me it can make perfect sense to do something today—say close a little used credit card account—that might drop my credit score a few points if I see more than offsetting (in my view of my personal situation) benefits—reducing my vulnerability to fraud, simplifying my life, and eliminating a tool that can tempt me to spend more than I can afford, in this example.

How do you feel about credit scores? Is it important to know your score? Have you made choices specifically intended to “optimize” your credit score?

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