Do those free credit report commercials give you anxiety? And I don’t mean because of the obnoxious songs. Well a recent report claims your credit score is a “whole lotta nothing.”
Entrepreneur Matt Haughey shares his own experience to uncover the real merit of this seemingly make it or break it score.
Haughey began his credit history like all Americans, in college. He found the more he used the card the more credit he was issued. After opening with $500 he quickly rose to $20,000 in debt by college end.
Haughey made timely payments but could not seem to get ahead. However as a result of riding the hamster wheel his credit score reached the 800’s, which helped greatly when applying for mortgages. Once he and his wife settled into a permanent home they began to tackle their debt aggressively until they each were able to clear both school loans and credit debt. Haughey began to use cash via debit card as his main form of tender.
Haughey noticed his score dipped below the 800’s as soon as the cards were paid off and he began to close accounts. He was finally in good standing, paying off two car loans and managing to get ahead on the mortgage, yet his credit score continued to fall.
Matt learned the main culprit was not having any credit card accounts so he decided to open one at a $5,000 balance to earn frequent flier miles and use while on vacation. He paid off the balance upon his return. As a result his credit score fell into the high 600s!
Haughey is in the best financial state of his life—clear of debt, soon to pay off his home and in a good position for retirement. Yet he in turn has the lowest credit score of his life.
Unfortunetly this all important number can effect your future greatly. But that doesn’t make it fair.