Can you really get by without debt? Would you want to?
This was the question posed to me by the Money Mastermind Roundtable on July 10, 2014. I absolutely believe you can get by without credit – and it doesn’t really matter if you want to or not.
See the bottom of this post for a replay of the show and my thoughts on this topic.
I pulled my credit score (really)
In preparation for the Money Mastermind Show discussion about I pulled my credit score.
I don’t focus energy on my score. Instead, I focus my time an energy on:
- Spending wisely and staying within budget
- Spending time on my business
- Spending time with my family
- Spending time volunteering
- Spending time mowing the yard
- Spending time and effort on just about anything else
For educational purposes only
For you, the viewer, I post this video of me buying my credit score through MyFICO.com.
I also walk you through the FICO Score Simulator, a nifty little tool that helps forecast how certain financial products and events affect your score.
Hint: Most actions don’t improve your score very much – but missing a payment drops your number like a rock! The lesson to be learned? Pay your bills and debts on time and you will have a good credit score.
Going against the FICO algorithm
I checked my credit score about 2 years ago. It was 769. According to FICO’s algorithm the more debts you have (and pay on time) the better your score. However, my credit report only shows six items – all of them closed since 2007 except our mortgage.
For me to start borrowing money, even on a credit card that I pay off every month, would not be worth all the trouble – especially since we don’t plan to borrow money.
If we did need to borrow money, it would likely be for another home. We have a long history of being able to pay our bills on time so we should be bankable for a loan. I am willing to go through manual underwriting or use a service like eCredable to prove our credit worthiness for a house.
So, the moral of this story? Focus on your personal finances, pay your bills on time, and pay attention – not interest.
Replay of the Money Mastermind Show from July 9, 2014: