Why Focusing On Your Credit Score Isn’t Always Helpful
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It shouldn’t be a mystery that your credit score is an important number. It is used in a variety of ways these days from auto loans, mortgages, employment, rental applications, and more. If you think your credit score is only used when you want to get a loan, think again.
One issue I have noticed over the years the number of people who fixate on their credit scores. ‘How do I get it higher?’ and ‘How can I raise my credit score quickly?’ are the types of things people are asking. It is good to ask how to raise your score as a higher score provides you with more opportunities. The main issue is a credit score shouldn’t be your focus. You need to focus on your overall credit health.
So Many Scores
After I put up my Credit Sesame review, people were emailing me about how they don’t get a real score from Credit Sesame. What is a real score? Most people say FICO is your real credit score, but unfortunately, that is not correct either. FICO is just one score and there are multiple FICO scores for each person. Each credit bureau has their own FICO scoring model along with their own proprietary credit score. This leads to much confusion when you go to a lending institution or just check your credit.
While there are a lot of scores to keep up with, it shouldn’t matter. Your credit score is just a number that gives lenders and other inquirers a measurement of your overall credit health.
Switch Your Focus
I did my fair share of Google searches looking for ways to increase my credit score when I was in debt. Article after article provided tips on how to increase your score. The problem with such tips is they just focus on you quickly increasing your score. They don’t focus on the underlying problem. Why is your credit score low? Do you have a bankruptcy on file? Do you pay your bills late? Why? These are the questions you need to ask.
Just as people want to get rich quick, they also want to raise their score quickly. I have to say this just doesn’t work. You don’t get rich quickly and you don’t raise your score quickly. While you can add a few points to your score by doing a few little things, it won’t make much of a difference. If you want to raise your credit score to a high level, you need to focus on your money management.
Great credit scores come from using credit wisely, making payments on time, keeping old credit accounts active and in good standing, not maxing out your balances, and more. Each of these aspects are really just giving a snippet of the overall picture of how well you keep up with your money. Are you overextending yourself financially? If so, then your credit score might suffer.
Credit Scores are Just Indicators
The one thing you need to remember about your credit score is it is just an indicator. That is all. In order to increase your credit score, you need to focus on the underlying problem. Once you get a handle on your finances and start making changes, then you will see positive changes in your credit score. Most importantly, you will see your finances improve and hopefully your stress level decrease.
If your low credit score is pushing you to make a change, then great. If you are just looking for a higher credit score so you can get a better loan, then take a step back and get a hold of your financial missteps and put yourself back on the right track.
Do you use your credit score as motivation to fix your finances or are you looking to raise your score as fast as possible? How often do you check your credit score? What do you do to maintain or improve your overall financial health?
Photo courtesy of: LendingMemo