With credit scores ranging from 300 to 900, it is amazing that anything below a 650 is frowned upon by many banks, credit unions and mortgage lenders. There are many credit cards which look closely at these numbers and even though they may not turn an applicant down, they sure will charge them extra in interest for such a low score. I can understand why so many people end up using short-term loans like cash advances, payday and title loans in order to get some help.
I’ve never heard of anyone having a 900 credit score. So I did a bit of research. I found some information on a man from Ohio who has the highest credit score above all Americans. Experian’s score only goes as high as 850, and this gentleman’s score was 848. He never knew about his score being so high because he never checked it. Imagine that! I enjoyed reading about his lifestyle. He owned two sports cars but carpooled to work in order to save wear and tear on the cars and to avoid paying for parking each day. I admire the man and his wife for making choices which helped balance out his budget. He has 7 or 8 credit cards, but does not use them to purchase anything which he will not have anything to show for it. I took a minute to think about one of his financial rules and came to the conclusion that it make perfect sense. I can charge and work off paying for new furniture as I will have the furniture to show for where my money is going. Paying for a vacation on a charge card does not make sense because once the trip is done, I have nothing of value to show. If I want to go on vacation, I should save for it or have the charge paid off before I go on the trip. Check’s and balances for a comfortable lifestyle.
Don’t use a cash advance or credit card when you now you cannot repay it in full.
He doesn’t spend money frivolously. His second rule is to never charge something that you know you cannot repay. This is a practical rule for any third party money. It makes perfect sense with a short-term loan. Get a cash advance and then what happens in two weeks when the money is due? How does it work with the first rule? Well, if you have something to show for the remaining unpaid balance then it is okay to take longer in order to pay it off. Using the furniture example, it may take a year or so to pay it off, but the balance should be gone long before it is time to replace the couch. Make a payoff plan and stick to it.
The third and final rule this gentleman follows is to make sure all bills are paid on time. This is one of the biggest mistakes a person can make with their finances. Credit scores drop dramatically with just this one error.
What did I learn from researching this man’s credit score? I learned that having a perfect credit score is basically unheard of. I was reminded of many things which I had learned in the past, but had not yet implemented into my finances. So I take away the new found idea and mission to not charge anything on a credit card or use a cash advance frivolously which I cannot pay off in full and on time. Long-term charges are for items which hold value in my life and I better start saving if I want to take my children on a vacation.
