Million Dollar Portfolio

FICO.

Do you know FICO? Do you worship at the great FICO altar? I used to. I used to believe that getting this number as close to 750 was the only goal I needed to worry about in terms of my financial future.

It’s true if you plan on getting any kind of loan or applying for any credit, the creditors are going to look up this score and determine if they want to give you that loan. So is it really that important?

Here’s the problem. We live in a society that is built on ensuring the majority of people stay in debt. Think about it. Banks and creditors make all their money from fees. Late fees, over the limit fees, finance charges (a percentage charged against the total debt you carry for that card). Where would banks and creditors be without average citizens carrying all this debt? Rich people aren’t in debt. In fact, when you have a ton of money in the bank, the bank pays you to keep your money there. It’s called interest and the more you have in the bank the more you make from the bank.

So this brings me back to FICO. FICO is the agency that has devised a way of judging how credible you are in terms of your debt. Put simply, the higher your total debts are compared to your total available credit, the lower your score. Seems reasonable right? It isn’t. Let’s say you pay off all those revolving debts and you never use those credit cards again. Great! you say. My FICO score will be perfect. Yes it will, for about 2 years. After that, if you don’t use your credit cards at least a couple times a year, that score will shrink and eventually disappear. That’s absurd! Yes, it is.  It’s why and how American’s have the worst debt in the world.

But I can just pay off my credit card every month and my FICO score will be perfect.  Sure it would be, but this is still the kind of thinking that got you in debt to begin with.

So I say, get debt free, stop worshipping at the FICO altar and don’t put yourself into a position to get into debt to begin with.  I know from experience.  I am not debt free by any stretch of the imagination.  In fact, counting my student loans I have upwards of $75,000.00 in debt, maybe more.  Getting out of a hole that deep is more than challenging, it’s living on the bare minimum and paycheck to paycheck…in short, it sucks.

FICO is just a license to get more debt so that you can take on bigger debts like buying a house or buying a car.  But you shouldn’t be buying house if you are in debt anyway.  I can’t wait to get rid of my debts and have a FICO score of zero!

Find out what I am doing right now by following me on Twitter! If you like this post then please consider subscribing to my full feed RSS. You can also subscribe by Email and have new posts sent directly to your inbox.

Blow away your Google competition
Internet+12 months=Millionaire