In other words, a credit score has nothing to do with how well you handle your money. But it does show how well you play around with debt. Your credit score is solely built on how much debt you have, what kind of debt you have, how long you've had it, and how you've paid on it. That's all.
All a credit score represents is your relationship with debt. It's based on how many times you've borrowed money and paid it back, so you could borrow more money and pay that back, and continue to dive deeper and deeper into debt. Chasing a high credit score is ridiculous.
Your credit score and your net worth are two numbers that can have a big impact on your life — and sometimes cause anxiety — but they aren't mutually exclusive. You don't have to have good credit to have high net worth, just as everyone with excellent credit, unfortunately, isn't rich.
There's no way around it: Good credit is important. A good credit history shows potential lenders that you have a track record of repaying borrowed money as agreed. That can reassure them that you're likely to do so in the future and are a desirable customer.
Ramsey says the people who need a credit score are the ones who plan to take on more debt. That's partially true. Having a high credit score helps you get the best financing rates for big purchases like a home, which few people can afford to pay cash for.
I first learned about Dave Ramsey, a personal finance icon, after graduating from college and getting interested in money. Ramsey opposes the use of credit cards — he says they make it too easy to spend money and get into crippling debt.
Your credit score doesn't matter. A credit score is nothing but an "I love debt" score. It's proof that you've borrowed money and paid it back, so that you can borrow more money and pay THAT back. ... If you want a life without payments, stop chasing a life WITH payments.
Typically, the higher your credit scores, the more likely you are to qualify for loans with the most favorable terms, including lower interest rates, higher dollar amounts, and potentially lower fees.
Generally speaking, a credit score is a three-digit number ranging from 300 to 850. ... Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
A score of 720 or higher is generally considered excellent credit. A score between 690 and 719 is considered good credit. Scores between 630 and 689 are fair credit. And scores of 629 or below are poor credit.
Payment History Is the Most Important Factor of Your Credit Score. Payment history accounts for 35% of your FICO® Score.
A credit score tells a lender how: quickly someone will repay a loan.
If you haven't used a card for a long period, it generally will not hurt your credit score. ... And if the card is one of your oldest credit accounts, that can lower the age of your credit history, bringing down the average age of the accounts in your report and lowering your credit score.
If your goal is to achieve a perfect credit score, you'll have to aim for a score of 850. That's the highest FICO score and VantageScore available for the most widely used versions of both credit scoring models.
Credit is part of your financial power. It helps you to get the things you need now, like a loan for a car or a credit card, based on your promise to pay later. Working to improve your credit helps ensure you'll qualify for loans when you need them.
A high credit score will make it easier for you to apply for better credit opportunities. For example, by establishing that you can make monthly payments on a credit card, you look like a good credit risk to a bank. That will make the bank more likely to give you a loan to buy a car or a mortgage to buy a home.
So, given the fact that the average credit score for people in their 20s is 630 and a “good” credit score is typically around 700, it's safe to say a good credit score in your 20s is in the high 600s or low 700s.
Paying off a credit card or line of credit can significantly improve your credit utilization and, in turn, significantly raise your credit score. On the other side, the length of your credit history decreases if you pay off an account and close it. This could hurt your score if it drops your average lower.
Having credit is not essential to your financial success. Credit is a tool, and if used wisely can be beneficial for many people who don't have enough cash to pay for things like a home or automobile. Credit is not an emergency fund and shouldn't be used to determine one's financial status.
Dave Ramsey doesn't mince words when he talks about credit card debt: ... “There's no positive side to credit card use. Even if you pay the bill on time, you're not beating the system.”
The elderly are the number one target of credit card companies. Co-signing a loan is a way to help out a friend or relative.