What I wish people knew about credit scores
People treat their credit scores like a prized plant - caring for it, watering it, pruning it, hoping to grow it into a big and strong 850 some day. People base their self worth on their credit score, and think they are a subpar human if something happens to make their credit score go down.
I can’t tell you how many people have sat in my conference room, tears in their eyes, ashamed at their current situation and the fact that their credit score has become so low. They used to be able to pay all of their debts on time! They used to have a very high credit limit! Banks would offer them new credit cards all the time!
I tell all of them the same thing I tell you - a credit score is just a number that lets a bank figure out how much money it can make off of you. The higher the credit score, the more money the bank will make.
You see, each credit reporting company and bank has their own method of calculating a credit score. They devise a scoring system based on several factors that indicate whether you are a good bet for the bank, such as your current debt compared to your available credit, your current monthly payments, and your number of late payments. The higher the score, the less of a gamble giving you credit is, and the more likely the bank will profit off of giving you credit. That is why a credit score is used to determine how much to charge you in interest and how much credit to give you. This determination isn’t based on who you are as a person, but based on how much money the bank can make off of you.
So when you are making a decision about your finances, don’t think about how it will impact your credit score. Think about how it will impact you, your family, and your future. If you have to choose between paying the credit cards and putting food on the table, put food on your table. Protect yourself and your family - not your credit score.