Credit Score

Managing your credit score is key to good finance.

Why? Because your credit score helps you do what your normal paycheck cannot.

It lets you buy expensive utilities that give your lifestyle a bump.

It’s how you improve the quality of your life…

However…

Some people managing their credit scores get “too meticulous.”

In the process, they forget the question – what is a good credit score?”

Basically, they assume that every minor debt mismanagement matters.

This isn’t the case though. Because not all factors affect your credit score equally.

In fact, some factors don’t matter at all.

We’ll mention those useless factors. Consider them a few less items to worry about!

#1 – Soft Credit Inquiries.

It’s a circulating fact that sometimes, inquiring about your score drops it a bit.

But this isn’t the full truth. Because there are two types of inquiries, those being “hard” and “soft.”

A hard inquiry can cause a serious dip in your score. They’re inquiries that happen when a bank checks your score (if you apply for a loan or credit card).

Soft inquiries don’t harm your score. In fact, you can do so yourself!

How?

Once per year, you can check your report for free.

You can do so at “Annual Credit Report.” This is a federal authorized site, for US credit scores.

This check doesn’t harm your score. However (as we mentioned), you’re limited in how often you can inquire.

So make sure you time your inquiries well!

#2 – Your Legal Age.

It’s another common misconception.

Some think that the younger you are, the lower your credit score is.

And there’s a logical reason for that. Younger people are more reckless and risky with money. So some loans should say off limits.

The Truth.

Your biological age doesn’t matter at all.

Just because you’re young, doesn’t mean you can’t take debt.

If that was the case, 5-6 digit student loans would be non-existent.

In fact, if anything matters, it’s the age of your loans. The faster you pay off a loan, the better your credit score.

So never worry about your age. The only thing to worry about is proper money management. And all goes well from there.

But since we’re on the topic of younger folk, we should also mention…

#3 – Your Education.

Being an Ivy League graduate doesn’t give you a nice credit score.

If anything, your education doesn’t matter at all. Because it doesn’t accurately govern “how well you can repay.”

Example.

You can be rich, but lack a higher level education. People like those are seen everywhere.

Just look at tech giants like Microsoft and Apple. Their founders were dropouts, yet great business geniuses.

Now, those are extreme examples. But more average folk exist, with lesser degrees and good business track records.

So if you’re worried that “no degree” drops your score, then worry less. It has no effect at all.

#4 – Income and Net Worth.

Probably the oddest items to mention on this list. But it’s true…

Your score has nothing to do with the money you have or earn.

Why?

Your credit score looks at your past on how you deal with debt.

It looks at how you manage debt more, and less at your financial capacity.

So don’t expect to see your income there. Nor should you expect to see your net worth in report calculation.

Also.

What if you change jobs, and your score isn’t recalculated in-time?

Or, what if your net worth fluctuates rapidly? That would affect how often your score needs to be calculated.

So in a sense, those are unreliable factors. They’re too volatile for a reliable “axiomatic calculation.

#5 – Criminal Records.

Good news. Redemption exists in the financial world.

If you were in jail, got locked up, or got fined, it doesn’t show matter.

Crimes don’t affect your score. Because again, they have nothing to do with how you manage debt.

The More You Know…

The better you’ll feel. Because you’ll know what to expect.

So now, it’s time to focus on “what is a good credit score.” And you do so by learning the real factors that goes into calculating it!