FICO Debunked

FICO may not be the holy grail you have made it out to be. Wealthy people care about income and assets - not about credit and debt. Your credit score may actually be worthless to you.

I often wonder why the average American worries so much about their credit. Why do you even care? A high FICO score can only lead to the possibility of high debt.

Shopaholics have been schooled to buy first, and pay later. Or maybe even hide the credit card statements. Out of sight, free to shop.

A FICO score can only help you get into debt, not become wealthy. Here are 5 reasons why FICO does not really matter:

1. Your FICO Does Not Cover the Nut.

If you have income to cover your bills, what do you need credit for. If you don't have enough money to buy gas, to pay for groceries, or to handle life's expenses, you have much bigger problems than a fluctuating number determined by a computer algorithm.

2. No Control.

Trying to raise your credit score, as the countless credit repair books will teach you, is a thankless task. At any time, the credit bureaus can alter their algorithms and change their emphasis to change your score - all beyond your control.

For example, your wife pays the landline phone, and you pay for the cell phones. Her score goes up, yours does not. You might write the checks for everything, but if the right bills (mortgage, electric, phone, gas) are in your wife's name, she gets the FICO boost.

3. Credit Bureau Mistakes.

Your credit score is like an idiot savant. It knows your payment history and debt-to-credit ratio. That's it.

What's missing? Your income. Someone who just landed a big paying job gets no higher FICO score. Someone who pays cash (credit ghost) who has no debt is treated like a leper. Mistakes also happen. Credit bureaus are notorious for confusing similar names and keeping bad information on file even after notification by effected consumers.

4. Mounting Debt.

All a high credit score can do is tempt you into taking on too much debt. For the person who lives debt-free within their means, a FICO score is worthless.

Use credit so-called wisely (pay at least the minimum on time each month) and you will raise your FICO score and be flooded by bank offers to take more credit cards.

Lose your job, suffer an illness, or don't pay on time, and you will wonder how the word easy was ever attached to credit.

5. Can't Take Credit Score With You.

You can't take your FICO score with you. It will never be broadcast at your funeral. Life is too precious to worry about a credit score.

Concentrate on living a wealthy life no matter what your income is.

Eat, drink, and be merry, just not on someone else's dime.

Live happily within your means.

Don't lose a moment of your life to worry about a mathematical score your cannot control.

Discover more alternative financial strategies at Burn Down the Freaking Mission.