This brief post is about one thing – my stance on FICO score and credit card use. You can take it or leave it, I’m just gonna lay it all out there for everyone to praise, pooh-pooh, or pout about.
So by all means… feel free to butt in.
A Little Background
If you want to read more about the background of our situation with credit cards and credit card banks please see any or all of the following previous articles:
- Credit Card Companies Are Raising Your APR – Here’s Why & What You Can Do
- More Reasons to Pay Off Credit Card Debt
- Credit Cards – Close ‘em Shred ‘em & Forget ‘em!
- Credit Card Rewards – Rethink Your Returns
I think that should cover it. For those who want to read up on it… go for it, otherwise let’s get on with it.
How I View FICO Score and Credit Card Use
This is actually just a copy job of a comment I left over on MoneyUnder30.com. David, the site owner, recently published an article encouraging visitors to radically re-think their credit card use. To summarize, David encourages us to close all credit card accounts except for two, and says we should try to keep our oldest card and highest limit cards open. He also advises against using credit cards for rewards – which I highly agree with! David’s advice is solid – if – you are trying to use your credit cards to build and maintain your FICO score.
Here was my response to his post, which basically captures our stance on the use of credit cards and how my wife and I feel about the FICO score itself.
Here is a brief synopsis of my sitch (situation):
We have no credit card debt. We have no temptation to use them, and have no problem setting them aside or using them responsibly. We choose not to use them for reasons that go beyond finances. We kept one card open, but we don’t use it either.
Okay, you’re probably with me so far… but here is where I’m going to lose you:
We don’t care about our FICO score.
Lost you didn’t I? I know there are all kinds of reason why we should care… but… we don’t. I know only about 5% of people will understand this point of view. The other 95% do not need to list the 15 reasons why you need FICO… we already know them. We still don’t care.
I could go on about how we are never going to borrow money again, or how we don’t care about how FICO effects our insurance premiums… but the most concise explanation I can give in an already long blog comment is to say that it is a form of protest against an industry that we do not believe in.
And I went on to say…
Some will think I’m crazy, some will think I’m an idiot, still others will think I’m right on. I think I’m doing the right thing for my situation.
Here’s the cool thing about not caring about our FICO: they’re still going to go up, or at least stay where they are. Here’s why:
We have two mortgages on credit, two student loans on credit, and a Lending Club loan on credit. We repay all of them on time every month… always have, and Lord-willing… always will.
So as I thumb my nose at the CC banks and their tangled and undesirable scoring system… I will retain and maybe even increase my score.
I call that, “beautiful irony.”
What Do You Think?
I don’t really have much else to say on the matter so I’ll shut up and open it up for discussion.
photo credit: pasotraspaso