Your Credit Score is Not a Measurement of Your Soul

What is it about that 3-digit number that makes us feel all kinds of crazy?

Dread, shame, disappointment, anxiety, and embarrassment are just some of the words that people associate with their credit score. I’ve asked countless individuals about their relationship with the number and so many have such a deep disdain for what it conjures up and makes them feel.

One thing I know for sure is that they are not alone. I think we’ve all been here. For me, I can remember seven years ago when even looking at my credit score gave me a visceral response.  It would make me insane that a number could make me feel like such a failure.  This gauge that someone had put on my creditworthiness meant so much more to me than just that. I gave this number so much power over me until I realized that it was JUST A NUMBER!

It wasn’t a measurement of my soul or who I really was. It was never personal.  

Our credit score is a collection of data; data that allows creditors to make decisions.  Nothing more, nothing less.

Once we shift our mindset around this we can allow ourselves the space to get to work.

 

So how do we get to work?  Here are some great ways to start:

1.  Check it - Create FREE accounts at websites like Credit Karma or Credit Sesame. They allow you to see your score for major credit bureaus, all open and closed accounts, credit utilization, history and more.

You can also request a free credit report at www.annualcreditreport.com. You can get one free credit report from each of the three major credit bureaus (TransUnion, Equifax, and Experian) once every 12 months, but this site doesn't provide credit scores, or more specifically FICO® Scores.

 

2.      Reduce the debt you have - Pay down the debt with the HIGHEST interest rate FIRST. Unless of course the interest is the same across all accounts and then you can pay the lowest balance first.

 

3.      Pay more than the minimums - The higher interest rates will have a substantial impact on your finances – especially if the balances are high and it would take years to pay off with only the minimum. You can use bonuses and tax returns to pay down that debt faster.

 

4.      Automate your bill paying - Timely payments is one of the biggest contributing factors of your score.  Note* - Don’t forget to put a minimum amount toward a savings account each month as if you were paying a credit card. Just because we are paying down debt, doesn’t mean we don’t save. 

 

5.      Get current and stay current – If you have delinquent payments, find out exactly what they are.  Get on a payment plan and stick to it.  This negative info won’t stay on your report forever but be patient.

 

6.      For more information about your score, how its calculated, fixing errors and much more go to: https://www.myfico.com/credit-education/improve-your-credit-score/.

 

The bottom line is that fear and avoidance will not change our situation.  The only way to get passed those insidious feelings is to face them head on.  We must also remember that it’s impossible we made it this far without making some good decisions, too! Celebrate those victories no matter how small.

 

Valerie Sanchez is Partner of Divine Asset Mgt. & Co-Creator of Divine WealthWise.