One thing that is apparent from reading blogs in the realm of finance is that your credit score is important. Keeping it high and cultivating it will greatly benefit you in life. Well, I have a confession to make, I don’t give a damn about my credit score. I also want to challenge the notion that it is important. I have not needed a good credit score for anything in the last 5 years.
A credit score is a rating determined by financial institutions to gauge how reliable you are when it comes to borrowing money and making payments on debt. Sometimes it’s thought it may even used to judge character. As a society that is encouraged to actively engage in debt credit score is very important.
What if you have no plans to borrow a penny or get into debt?
Well if that is the case then you really don’t need a credit score now do you! I got into terrible debt in the first half of my 20s, I had 5 credit cards at one point. When I got all my debts under control I realised my credit score was ruined for some time. I made a pledge never to use credit again. I never plan on having a credit card again and never plan on having a mortgage. If I buy land or property I will be walking in with a suitcase of money.
Improving your credit score often involves purposely obtaining debt and paying it off in a timely fashion to create a history to contribute to your score. I see this as a dangerous slope towards getting more debt, even if you do keep up with minimum payments!
So no credit cards, no debt, no mortgage, no car payments, no need for credit, right?
I know a lot of people are not convinced and I want to go through some worries people have.
You need a credit card for some things like booking hotels or renting cars
Most modern bank accounts now supply Visa debit cards. I have a Visa debit with my bank and a MasterCard debit with my PayPal account. These cards are directly attached to the money I have so there is no debt involved. In 5 years there has never been a situation where the Visa or MasterCard debit has not been accepted when asked for a credit card. This includes booking rental cards, hotels, buying online and setting up subscriptions. Also, as far as I can tell, I am protected from the same Fraud protection as a credit card is.
The only downside is I don’t get the CC perks, no air-miles or cash-back. Personally having the peace of mind of no debt outweighs any CC rewards.
What if my employer or a potential land lord wants to check my credit history?
The important part here is “credit history” a credit score is different. For me I want a blank credit history. Generally employers and landlords want to see that you pay your utility bills and rent on time and if you don’t own credit cards or have a mortgage that shouldn’t go against you.
I do have bad marks on my credit history but they are over 5 years old now and I have not had any trouble renting homes since. I don’t know if they have been looking up my history or not but they have always been given the details when asked and my record is clean in recent years, clean but not very active.
But what if you desperately need a loan
If I run out of money, i’m just going home to live with one of my parents. If you can’t pay for something then maybe it’s better you lose it.
What if you have a medical emergency
First off, you absolutely must try and be insured properly. This will take care of a large portion of medical bills. If you happen to end up with a large portion to pay then you won’t need to get a loan because the hospital will likely set up a payment plan regardless of your credit score.
How will you grow your business without access to loans
Business startup is becoming easier to set up, maintain and run on a low budget. Technology means that if you take it slowly most people can afford to start their business ideas on a modest startup alongside their regular job. Personally I think you should try and do this from your own money without loans unless you are going into a large scale business that you 100% know.
Other blogs take on the need for a credit score….
It’s important to supply some balance so here are a few articles from other sites talking about credit scores and history, some in opposition to my view.
- 3 surprising ways your credit score could be costing you – Financial Highway
- How an excellent credit score has helped us save money – Free From Broke
- Why your credit history is important – Credit Card Smarts
- What your credit score actually means – Boomer & Echo
What’s important to note is that in these articles they seem to agree it’s the history over the score that matters. I don’t think that history doesn’t have to include debt, it just needs to try and be clean which it will be if you don’t bother getting into debt or just get all your debt paid off and closed down.
Not giving a damn about credit isn’t for everyone but….
I don’t want to turn around and say that no one should care about their credit. I have made a decision that fits my minimal life. The less stress and things I can think about the cleaner and easier I find it to live my life. Not having debt and not worrying about credit scores and such things is a way to reduce another load on my life.
Some people won’t be able to accept not having a mortgage, not having a credit card and some so-called “sensible” debt. I’m not saying they are wrong but I am trying to get people over to my side. There is nothing wrong with having a mortgage but I believe a house can be achieved without one.
Even up until fairly recently I thought credit scores mattered and you would probably even find credit score related posts in this blogs history.
So, do you really need debt for anything, do you need to worry about your credit score? The answer might be a big fat NO.