My credit score is higher than it’s ever been and I have never cared less about my credit score. Coincidence or consequence? Let’s discuss why and when your credit score becomes irrelevant.
This post is to emphasize that a credit score should be fairly irrelevant for someone seeking to be or who is financially independent. It’s just one of many systems designed to keep you indentured.
I guess the credit score in the US is run on a scale of 300-850. Mine is now sitting at 810 and I have had my credit frozen for several years.
I have closed several credit cards over the past few years and my credit score keeps climbing.
I’ve even closed old credit cards, the ones you’re not supposed to close in order to retain your history. In fact, in the explanation section as to why my credit score isn’t higher, it states that I don’t have an old enough credit history.
Purpose of a Credit Score
Generally your credit score is used to determine if you are a sound borrower. It’s for the purposes of extending you a loan for a home, car, appliances, and other personal debt.
It’s sometimes used for employment as well. Or when you’re trying to rent an apartment.
Obtaining a Loan
I don’t see the point in applying for a consumer loan. These kinds of loans only allow you to purchase liabilities, not assets.
Assets, such as an investment property or commercial real estate, are purchased through bank loans through commercial loans.
For such commercial loans my credit score is fairly irrelevant. The bank looks at my experience level running that asset and how much I have saved up.
History of Credit Score
Back in the day you had to pay for your credit report and then pay extra for your credit score. Now, credit scores are free and even flashed at you by your bank, credit card issuer, and account aggregation websites.
A few years ago you had to hustle to see your credit score and now you can’t escape it. It seems that businesses have figured out that if they make the score ubiquitous, consumers will be more aware of it and probably take steps to improve it.
Improving your credit score often requires spending which is in the bank’s best interest but not yours.
Financial Independence and Debt
In order to become financially independent and remain financially independent, it’s necessary to curb debt. Well, actually, it’s necessary to avoid it like the dick flu.
The exception is when debt is used to finance assets. Assets being things which can go up in value, help you preserve a net worth, or allow you to earn money in some way.
The average home is rarely an asset. A primary residence is often chosen based on very individual criteria with little thought given to the viability of it as an asset.
Credit Score is Irrelevant
I am taking the stance in this post that you can ignore your credit score if you are relying on yourself to be your own bank. In fact, you can stop all attempts at improving your credit report.
If I need money then I’ll be my own bank. Or maybe I’ll turn to my network of friends or consider a commercial loan which is less dependent on my credit score.
A credit score holds you hostage to spending because you have to flash that credit card or pay down a loan in order to elevate that credit score.
The concept of paying attention to your credit score and credit history is fear-mongering. It’s meant to scare you. The same way your employer or the medical board puts enough fear in your to keep you from acting and thinking independently.
I have recommended before that you should freeze your credit reports which serve both to protect your from identity theft as well as save you money in the long-run.