There’s a lot of talk today about credit scores. It seems like everywhere you turn, someone is telling you how to improve your credit score, how to find out what your credit score is, understand why your credit score sucks, or how credit scores are computed. An entire industry seems to have sprouted up around the idea of the credit score as more and more consumers become concerned with how creditors view them.
Still, a credit score isn’t the most important thing in the world, not by a long shot. In fact, it’s not even the most important factor in your finances. Here are a few things about your finances that should concern you way more than your credit score:
- Your spending habits. People get credit because they can’t afford to buy things with cash. In the case of a lifetime investment like a house, this makes sense. It probably makes sense when it comes to a car, too. But it doesn’t make sense when it comes to going to the movies or buying a TV. If you can’t afford these things, don’t buy them. Your credit score is completely inconsequential to whether or not you make responsible decisions.
- Your credit history. Your credit score is based on your overall credit history. If you have specific items on your credit report, for example, that are inaccurate, it’s going to significantly impact your credit score and more. On top of that, some employers will even look at your credit history to see whether or not they thing you’re responsible enough to work for them.
- Your income. Along with spending habits, your income matters greatly. If you want stuff that you can’t afford, the answer isn’t to go out there and apply for another credit card. The answer is to earn more money so you can buy more stuff. If you focus on ways to increase your income, whether it’s a part-time job, career advancement or education, you’ll find that you’re less worried about your credit score because you’re more able to just buy the things you want.