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How Important is Your Credit Score?

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Having a good credit score makes life easier.  You can borrow money easier than someone who has bad credit (if you really want to do that), you will have an easier time renting, you might pay less for insurance, you don’t have to worry about employers or potential employers labeling you or not hiring you if they run a credit check, etc., etc., etc.  There are many perks to having a good score.  However (and it is a BIG ONE), what is the REAL value of having a good credit score?  I devoted an entire chapter of my book to this topic, titling the chapter, “I Don’t Care About Your Credit Score…and You Shouldn’t Either” to make it obvious my stance on the issue (and to rile up a few people who want to argue the point).

I do not care if you have good credit or bad credit because credit is not the target I’m aiming for.  I’m aiming for freedom.  Also don’t misunderstand me and misinterpret what I’ve written thus far to mean I don’t care about your credit report.  Your credit report is VERY important because it is a public record that provides all sorts of information…and a lot of the time it is wrong.  So while this article isn’t about correcting inaccuracies on your report, please make sure you do so.  I may write about that later to give you more details.

Having a good (or bad) credit score does not make you a good or bad person.  I know plenty of very good people who have terrible credit.  I also know plenty of horrible, rotten people who have stellar credit ratings.  Despite what society wants you to believe, you won’t go to hell if you have a bad credit score – I promise.  Let me give you the secret of this whole thing: if you do what you are supposed to with your money, your credit score will take care of itself.  Let me prove it.

According to Fair Isaac, the people behind the FICO Score, your score is based on the following:

  • Payment History (35%)
  • Amounts Owed (30%)
  • Length of Credit History (15%)
  • New Credit (10%)
  • Types of Credit Used (10%)

Notice a common thread?  To have a good credit score, Fair Isaac actually admits you to have and use debt!  Let’s put it another way. If you are 100% debt free and have zero payments, your credit score will not be as good as someone who has lots of debt and pays payments every month (all other things being equal).  As someone who lives life under the guidance of Romans 13:8 (“owe no man anything, but to love one another: for he that loveth another hath fulfilled the law.”), it is extremely difficult for me to also tell you to go out and work on improving your credit score.

Instead, here’s what I want you to do.  If you’re behind on bills, catch up.  If you’re not living on a budget, start TODAY. If you’re unable to make your situation work financially, make whatever changes are necessary to get things back in line.  Do not pick up the chains of bondage that accompany a payment book.  Do not buy the lie that your credit score is the answer to making all your financial dreams come true.  Consider actually saving for a major purchase rather than financing it.  In short – behave with your money!  Your credit score will take care of itself.  So repeat it with me, “I don’t care about my credit score.”  Again: “I don’t care about my credit score.”  Again: “I don’t care about my credit score.”  After saying it a dozen or so times, it won’t sound nearly as strange and hopefully you will recall it next time somebody tells you that you must have a good credit score to do ______ (insert task here).

Want more?  In this space I can only scratch the surface of the issue.  Before arguing with me until you turn a lovely blue color or your head actually explodes, consider buying my book and reading all about my stance on the issue.  Then come back and disagree all you like.

*This post is linked at Frugal Tuesday Tip on Learning The Frugal Life, at Frugal Friday on Life as Mom, and at Frugal Days Sustainable Ways at Frugally Sustainable.

Comment Policy: I love hearing your thoughts and input on what I write. Since I write about what works at my house, what pleases my handsome hubby and darling children; I'm sure we'll disagree sometimes. In those cases, do what's right for you and yours. As with any form of communication, please only post comments that move the discussion in a positive direction.

About Barry

Barry is the husband half of the Stacy Makes Cents team, responsible for all the marketing, website development, sanity management and taste testing. Barry writes about personal finance issues, helping people get out of debt, live on a budget and make the most of every cent that comes into their hands. He is the author of From Debtor to Better: The Details of Debt and How to Get Out! and writes periodically on his own site, Debtor to Better.


  1. says:

    I couldn’t agree more. I don’t know for sure if we actually have zero credit score YET but it is imminent. We have no credit card debt, no mortgage, no car loans, no student loans. Some people seem to think that only spending real money makes our life harder…but they are missing the boat on that one. Having done both, I can say unequivocally that I have never had this much peace and simplicity in my life. Now that we have slayed our debt dragons we no longer have trouble saving up to pay for things that are pricey….our money is freed up and so are we.

    Important to note…in the three years we have not possessed credit cards or any other form of debt we have had a baby, gone on a three vacations to Florida and Disney World, rented cars, reserved hotel rooms online, bought plane tickets….all on a debit card. Since the debit card is a Visa debit card we have the same protections as a Visa credit card, can use it as a “credit card” when swiping it (saving us a fee) but all the money is real money in our checking account. We pay cash for all groceries, entertainment (movies, excursions with our 3 sons, etc), clothing and shoes and the weekly pocket money for my husband and me. Our life looks just like anyone else…we don’t wear rags or eat only buckwheat gruel….we just have peaceful hearts because we are in control of ourselves and our money now.

    So….I love this post, Barry! Bring it on!

    • LOVE IT! Thanks for this reply sharing a great testimony of how debt is NOT necessary and credit scores aren’t important.

      • Chrissy says:

        Thanks, Barry. I forgot to mention..none of this was while making a big pile of money. We have three sons, I stay home with them and our income is less than 70k a year…but when we started becoming debt free it was less than 50k. It wasn’t easy, but it sure is easy now. Do you know how much 70k is when you have no payments at all? It is like being RICH. Lol. Dave Ramsey is no fool…that’s for sure.

        • Not a fool at all! And it’s so comforting to know he’s giving information out that’s based on REAL LIFE. Because, he’s been there.

  2. TracyDK says:

    We’re working on this very thing ourselves. We’ve already eliminated our car notes. We are working on one loan and a couple of student loans. And eventually they will be eliminated and we’ll be positively debt free. Then the money used to pay for those debts will be put back for our house. The Mr. is wanting to be one of the FEW people to purchase a house outright with cash instead of taking a loan. Or if he has to take a loan, he wants to take out a small loan. (something that can be paid off quickly.)

    • It IS possible to purchase a home debt free…your Mr. is smart! :-) We’re doing the same thing right now….and it will feel SO GOOD when you scream “We’re debt free!!!!!!!!!!!!!”

  3. Courtney says:

    We’ve cut up our credit cards this past month. We’ve never carried a balance but I wanted to stop the temptation. We’re hoping to be debt free by the end of the year and hopefully some day buy a house in cash. Here’s hoping! Thanks for the inspiration!!

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