Do you know your credit score? Do you think it is smart to keep up with it? There is a common belief in today’s society that your credit score matters so much that you must check and monitor it on an almost continual basis. The underlying idea is that if you don’t know it, and don’t keep up with it, then you are not being smart about your finances. Is this really true though, or could there be another side to the story?
Is Zero Credit the Same as a Zero Credit Score?
Theoretically, you could say that a zero credit score is possible. However, that is not exactly the same as saying someone has zero credit. If you’re young and have not really had any financial dealings, you would have zero credit. If you have not paid any of your debts, ever, then it probably is possible to have a zero credit score. But, whether or not your credit score matters, or should matter, is still another question.
The Option to Be Loan Free
The main reason why most people believe your credit score matters so much is because it affects your ability to obtain loans. But, if you step back for a second, then you’ll realize that one very big assumption is being made with this argument. Everyone assumes that you have to obtain loans in today’s world. That’s not really true though.
Cash is Still Accepted
Maybe you have had bad experiences with credit in the past? Or, maybe you have had family members ruined by credit issues. So, now you are determined to stay loan free and debt free. That is certainly an option. It is somewhat on the extreme, but definitely an option. Just think of the freedom of knowing that you are never going to have a car payment, mortgage, or any other type of loan or debt. The feeling must be amazing. To make this a reality is not exactly easy. Do you have to be rich to be able to make this work, only using cash? Also, why would your credit score matter if you only ever use cash?
Is Cash Only Really Possible
Ok, so if you are already rich, then using only cash is no problem and you really don’t need to worry about whether or not your credit score matters to anyone. But, for most people, this does seem to present some problems. The arguments are pretty obvious. For one, you’ll never be able to rent or lease an apartment without a credit score. Secondly, there’s no way you can get a mortgage if you don’t have a credit score. And finally, you can’t possibly buy a car without a loan. These are good arguments but not exactly factual.
What Your Credit Score Says About You
Most people, at some point in their lives, are going to do one of the three things mentioned above. They’re going to get an apartment or buy a house or buy a car. It is just conventional thinking that says your credit score matters if you’re going to do any of these three things. Just take a second to ask yourself why your credit score matters if you want to rent an apartment? Is that really all the landlord needs to know about you as a person? It’s easy to see the faulty thinking that goes with seeing everyone as just that one number. Luckily, there are some alternative methods to show your dependability.
Paint a Picture of Your Dependability
The truth is that banks and other financial institutions use your credit score as a way to simplify the process. Your credit score matters to them because they don’t know your financial habits. This doesn’t mean that you have to go the conventional route though. For example, there are online services that you can use to show you are dependable and credit worthy. It is referred to as manual underwriting and it uses all of your actual financial information including income, savings, debts, etc. to determine your ability to make your mortgage payments. As far as buying a car goes, many would argue against ever buying a new car in the first place because of the substantial drop in value the moment you drive off the car lot. Saving your money and paying cash for a used car is a much better value. However, it is nice to know that services exist that can help demonstrate your credit-worthiness, whether it be for a new apartment, car, or house.
Some Final Thoughts on the Issue
Some banks and institutions will always care about your credit score. That’s their option. Just remember you have options too, and they include not going into debt and not being consumed by your credit score. The point is that a credit score is not necessary regardless of how much your credit score matters to someone else.