You do want a high credit score

Clare from Young and Thrifty is one of my favorite bloggers, as is Nelson Smith, of Financial Uproarfame. Clare asked Nelson to guest post this week and he wrote Enough with the obsession with credit scores.

This happened to hit me in the gut, as regular readers will know I am passionate about maintaining the highest possible credit score. Why? Here goes…..

Years ago, down to my last pennies and about to be evicted from my rented home, I was accosted by a young lovely in the lobby of an office building and ‘coerced’ into applying for a new credit card. I quickly signed up and forgot all about it till a week later a $10,000 visa arrived in the mail. That money gave me the room I needed to turn my life around. Through all my troubles, I had maintained a perfect credit history.

When it’s time to get a new car and enjoy that 0.9% lease rate, you know your high credit score will help, rather than destroy your chances.

And even if you want an older car, chances are you will need financing. Better pay the bank rate than the 30% or so some of the B lenders will offer.

When you decide you just have to own the latest iPhone, and the phone company conducts their routine credit check, you don’t have to worry about being declined, or being forced to put up a security deposit of up to $1,000.

When it’s time to start a new business with nothing more than a good idea, a business plan (maybe) and a passion, you know you can tap into low interest rate credit to kick start the biz.

When I was buying my first house many years ago, I broke all the rules and tapped into my unsecured credit facilities to come up with the down payment. A few years later, I had leveraged that play into a tax free profit of $50,000.

You want a margin account at your brokerage to leverage your good investment ideas? Better have a decent looking credit report.

When a new employer asks for your credit report, most of the time you can access it yourself and provide it directly. At least you avoid the ‘hard enquiry’, and preserve your score.

Sometimes business and investment opportunities pop up with no advance notice – and most of us do not have serious cash lying around waiting for these moments. But if you have access to large amounts of unsecured credit, you can pounce on these opportunities and make $$$$$.

A really high credit score can lead to preferred status with your bank, resulting in lower fees and better service.

Just because someone is in debt, does not mean they have a low credit score. Their score will drop faster as a result of missed payments, unpaid collections, and too many enquiries. (Clare mentioned she had lots of balances but still had an excellent score of 780)

Anyway, it is true you can survive and get by with a lousy credit score – I have been there and done that. But all in all, I’d rather not, and recommend you do care about your credit score and maintaining an unblemished credit history.