We live in a society that seems to put great weight in a high credit score (the number reported by the credit reporting agencies). Such a score is really only a conglomeration of various factors dealing with the timeliness of your payments on secured and unsecured debt and the available credit you have at any given time. Thus, you will have a higher score if you make all your payments on time and if you have significant available credit.
But, does it matter? Having a high credit score gets you a better deal on credit. You can borrow more for less interest! That’s all it does: allows you to get further in debt!
Thus, if you have an 800 score, you’ll be able to buy a car on credit for their “special” interest rate of maybe 4%. But if your score is 600, you’ll have to pay 7%. Thus the higher credit score will save you 3% on the financed price of the vehicle over the length of the loan. Typically this means that on $20,000 borrowed to buy the car over five years, you will save about $1600. Hardly a major catastrophe in your life should your credit score slip a little!
