A high credit score doesn't mean you're financially healthy. Charging a $12,000 fence to a credit card can drop your score from the high 800s to the mid 700s, but it bounces back when you pay it off. What matters is the trend over time, not any single number.
Chapters
Hey Wise Guys, I just was looking at something and I thought you might find it interesting. So oftentimes I see people who just are so worried about their credit score and they're kind of worshiping their credit score, but the reality is it's just kind of a, a snap time and an assessment of what you're doing. And, um, I've seen some conversation in a group that, oh, my credit score hit 850 and I'm so proud, and Honestly, a high credit score oftentimes is a reflection of how much debt you have or how many types of credit you've used and that you're a good repayer of that debt, right? So it's not a bad thing. We always want good credit score because it does impact everything from, you know, your interest rates that are available to you on credit cards or car loans or house loans, but it also can affect hidden things like your car insurance or your rent. So having a good credit score is a good thing to have, but I wanted to show you mine here, how it dipped dramatically in April, even though like my life hasn't really changed a whole lot. However, we just bought a new fence, which was $12,000, so that all went on the credit card. I've been waiting to pay off the credit card, take the money out of my savings, and then pay off the credit card. So it rode for a month on my, on my credit, which kind of as a financial coach bugs me, but I knew I had the money for the fence, right? So you can see how my score dipped down to like 755, and before that, I don't think it's going to show you, but it was like in the almost 800s. Now it's back up to 809 because I paid the bill off. So nothing big happened. I wasn't a bad, you know, but it looked like my credit utilization had gone very high in an unusual way. So Keep in mind that this is a trend that we're looking for. More like if you're getting out of debt, you're paying it off. One of the reasons my score sometimes is not 850 is because I don't have any debt anymore. I don't have a mortgage, I don't have a car payment that is reporting on a regular basis to the credit score. So you might have an 850 and $50,000 of debt. So don't equate your score to your financial health. I just wanted to help you look at and don't forget —when it goes down to zero or when you paid it off. Have a great day. Be wise.
