I’ve come up with a new motto: “Say NO to FICO, I’m working on my DEBIT SCORE”.
FICO is the company that collects consumer credit data. They are in the business to sell this information to individuals and companies and offer to sell it to you with your “Credit Score”. How is a credit score evaluated?
The components of a credit score all have to do with borrowing money: credit cards, car payments, and other types of loans. So a credit score, as Dave Ramsey puts it, is an “I love debt score”. The more you borrow and pay back on-time the better your score. But the more you borrow and pay back on-time the more interest you pay, that’s how credit works. It has nothing to do with how much you make or have saved. You can be a millionaire and have a zero Credit Score.
For the past 3+ years my wife and I have been debt free (except for the mortgage) and I cut up my last credit card 4 years ago. Once I committed to living without plastic I found it rather easy to pay for everything with cash or my Debit Card.
I’m not paying interest (except for the mortgage) and paying cash for everything so we are keeping more of our money.
Without all those loans and credit card statements floating around I have less chance of someone stealing my identity.
Paying bills (lights, phone, internet, etc…) is MUCH simpler.
Paying cash, or using a Debit Card, makes you think twice about purchases, which has greatly reduced the “buyer’s remorse” I used to get when buying something on a whim and later regretting it. There are things in the attic I bought on credit that I can’t remember the reason for purchasing.
I don’t have to scour a credit card statement for incorrect/fraudulent charges. Most people don’t even look at them and could be paying for charges they didn’t approve. I just balance the checkbook monthly and know instantly if there are any problems.
Certain insurance companies use credit scores to rate you, so car insurance could be higher.
I don’t want to work on my CREDIT SCORE, I’m going to say “NO” to FICO and work on my DEBIT SCORE!
Note: You should review your credit REPORT (score not included) on a regular basis. Watch my video-tutorial on how to get your report for free: http://www.moneyplansos.com/vid-torial-annualcreditreport/