Finding balance in a chaotic world

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December 2017
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What’s the Score?

I periodically check my credit report each year to insure that everything is correct on it. You get one from each credit bureau for free each year, so it just makes good sense. This time I also had my credit score pulled, mostly to see what it actually was. I was pleasantly surprised to see that it was over 800 (out of 840) meaning I have very excellent credit. I was pretty pumped about that, like getting an A in school, but then I wondered why?


Don’t get me wrong, having good credit is always good, but I thought what impact will this actually have on my life? Coincidentally, this morning I read an article in Best Life magazine talking about how important to you your credit score was and steps to take to improve it. Things like pay bills on time, don’t have too much debt, etc. They also showed a chart of average mortgage rates depending on your credit score. The APR varied from around 5% to 9% all depending on what that score was. Now I could see some benefit to having a higher score. On the other hand, I have no intention of buying a new house in the next ten years or so.


It reminded me of a conversation I had with my grandmother a few months back. She had gotten involved in some debt that a person staying in her house had accumulated. It wasn’t much, around $300, but my uncle thought the company owning the debt was taking advantage of my grandmother so he continued to negotiate the amount down. Eventually he got it to $40. They called my grandmother and threatened her that if they didn’t get their payment that it would impact her credit. She decided to just pay it to get it over with but was afraid my father and uncle would scold her for doing so. I told her for $40, it was worth it to just get rid of it and not to worry about it again. But in my mind I wondered “why do you care what your credit score is? You’re 89 years old. What are you going to take a loan out for?” But it is ingrained that your credit it critical to your life and bad credit means bad life.


Obviously, bad credit can impact you but having great credit is of limited use when you have no intention of gaining new debt. I suppose it makes my choices of possible credit cards a little more expanded and if I do buy a new house it will definitely help there, but other than that, no impact. And why? Because we have no debt (other than mortgage) and no intention of getting new debt. No car payment, no student loans, no home equity loan, no credit card balance, nothing.


This isn’t to brag about me (really my wife, she’s the one who championed our debt-free plan), but to say that when you unload your debt, your concerns become so different from the rest of the country. And this difference brings peace. So I encourage you to aggressively get rid of your debt. You will gain peace you never knew and as a side benefit, it will increase your credit rating.