The subject of credit and your credit score usually puts people in one of two camps. Some people live and die by their credit score and think it’s the most important thing in the world. Others think it is a stupid number, and there is no sense getting wrapped up in it.
To be fair, let me present both sides of the argument, and you can choose for yourself. Once you have an idea of where you stand on the issue, you’ll be better equipped to determine when you should start worrying about credit.
- Pay Attention To Your Credit Score Starting Yesterday – In today’s economic world, your credit score will follow you everywhere. If you ever want to borrow money of any kind (school loan, car loan, home mortgage, credit card, etc), your credit score will be one of the biggest, if not the biggest, determining factor for if a lender will give you money. In addition, your credit score goes beyond finances and will affect other parts of your life that you may not realize. It could affect your ability to get a cell phone, rent an apartment, and maybe even get a job.
How?
Because whether we like it or not, people use your credit score as a gauge to how responsible you are. If you aren’t responsible with money, why would you be responsible in other areas of your life? If your credit score shows you can’t pay your bills on time, can a landlord trust you to pay rent on time or can an employer trust you to show up on time? All are valid questions.
- Forget Your Credit Score…It’s Stupid – Your credit score is made up almost entirely of factors that are based on one thing: DEBT. How much debt you have and what kind of debt it is as well as how quickly and reliable you are able to pay it off all contribute to your credit score. So if you’re someone who hates debt and wants to avoid it at all costs, then more than likely you’ll have a lower credit score since again, that score is figured up based around one factor: debt.Does that mean you can’t get a cell phone, rent an apartment, get a job, or even buy a house?Not at all, but it does mean that in some situations it may be more difficult. Does every apartment landlord check credit scores? No. Does every potential employer check credit scores? No. Can you get a cell phone or even a house with a low credit score? Yes.
That being said, where do you fall? Personally, I land somewhere in the middle and that’s probably a healthy place to find yourself. I know my credit score is important, so I check it a few times each year to make sure there are no major issues. But I’m not someone who is checking it on a regular basis, consumed with whether it goes up or down. At the same time, I’m not a fan of debt at all, so I think it’s foolish to go into debt to improve your credit score.
So when should you start worrying about your credit score? You should start paying attention to it NOW but you should never find yourself worrying about it.
YOUR 2 CENTS: How important is your credit score to you? Why?
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I used to think my credit score was important. I even checked it a time or two. But then I realized what you were saying in the second option. Your credit score is based on your ability to have credit (a.k.a. DEBT). I looked around me and saw what debt was doing to my friends. Even though sometimes they didn’t see it, it was ruining their future or at the least slowing it WAY down. I am done with debt. As long as it is up to me, no more loans, credit cards, etc.
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Where I live there is no such thing as a credit score so I don’t really have anything to say about it. However I find that it is important that you know your financial situation and work to improve it constantly. Because you can rest assured that nobody else is watching it (unless you owe money to them).
As for debt i think there are two sides of it. Some debt is bad and some is good. Good debt is debt that you use when investing wisely and debt that will help you make more money. Bad debt is debt that you use for expenditures and luxury. So having debt is not necessarily bad but it is important what kind it is.
/Mikael
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I do have one question. I’m only 16, but in a year or so when I try to get student loans for college, will my credit score (which probably won’t exist yet) be a factor in that or will they pay attention to my parent’s or…what?
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