Here is a simple question: Do you worship your FICO Score?
What’s with the religious connotation? This is a website about finances and bankruptcy, not religion, but the question remains.
Do you mean “worship” your FICO score/credit rating like you worship God?
Yes, that exactly what I mean.
Webster’s Dictionary defines “worship” as:
“reverence, honor and homage to God or other sacred personage, or to any object regarded as sacred . . . to feel an adoring reverence or regard.” (Webster’s, New Universal Unabridged Dictionary, 2nd Edition)
But, how can we worship a FICO score?
FICO stands for Fair Issac Company – the company that compiles data from the major and minor credit reporting agencies which they than issue a “score” or a rating of our credit worthiness based upon a mathematical model.
The numerical score typically is reported by the various credit bureaus in a range of 400 to 800 – the higher the score the better. Just like an SAT score or a grade we earn in school, our FICO score is used as a device by others to define are “worthiness” – our credit worthiness.
It does not determine who we are as people; whether we are good or bad; love our children and families; good at our jobs; nor does it define our happiness or satisfaction we get from life.
There is no doubt about its effect on our ability to get a good mortgage rate, car loan or credit card, but the score is also used by employers and insurance companies. If you have a high score you’re a “good” person in the eyes of the banks and credit lenders, and a low score we get “rejected” or turned down by these same companies.
But I’ve begun to notice an insidious trend with clients, they begun to relate their credit score to their worthiness as individuals. They reveal in various ways that their credit score is sacred, most often by going further into debt to make their monthly minimum monthly payment. Obviously, this is just an illusion that can not be sustained, but the reverence that some people hold their credit score often borders on scary.
A common refrain from prospective bankruptcy clients is that “before my current situation (fill in the blank: divorce, loss of job, loss of overtime, sickness) my credit score was 750.”
They are so proud of their score. It means they are accepted; a high score means they can’t be rejected (one of the top 5 fears most people face in life) by banks or credit card companies.
Just because you want to pay your bills on time each month is not an indication that you worship your FICO score or that you’re endangering your finances. Paying your bills timely is a good thing – and it’s what builds your credit score or the long haul.
The problem or trap that I see people in financial distress is that they want to maintain that high score at the expense of getting off the credit card merry-go-round – the use their cards to pay the minimum balances or withdraw money from their retirement accounts (without paying off the balances and cutting up their cards).
I refer to this financially self-destructive strategy as a “financial fiction” – creating the illusion that everything is ok (this month) while go further into debt and ignoring the larger question of long term financial sanity.
So are you worshiping your FICO score or do you hold out your credit rating as a “sacred object” (see Webster’s definition)? Only you can answer that question or maybe you can’t because you so laser focused on getting through this month (hoping things will turn around) that you don’t see the elephant in the room.