When a person told me this, I first felt that she was kidding me: “I want to get into debt so that I can build a good credit history.” Later I realized that she was indeed serious. I got to hear a similar thing from a couple of more people. I was astonished at their idea of financial prudence.
The last decade has seen the rise of the financial-planning industry and its associated caprice. There is at least one company that rates you on your credit worthiness. Many people are eager to maintain a good credit score so that they can easily get into more debt. Recently a salesman asked me if I used a credit card and hence if I had a credit history. I don’t use a credit card.
Should you worry about your “credit history”? Absolutely, you should. But not because you need a good “credit score.” If you have borrowed money, you must honor your commitment and pay the money back. That goes without saying. What is even more important is that you cultivate good financial habits. Being financially strong is more important than worrying about credit history.
How do you become financially strong? By following the old, common-sense principles of money. Save more. Control your expenses like crazy. Avoid debt. Learn about business and investing. Invest more. Reinvest the profits. Keep repeating the process.
Sounds boring, isn’t it? The most effective things are also the simplest. There is nothing thrilling about them. Those who follow the traditional financial wisdom don’t have to worry about their credit history. They can buy anything anytime without getting into debt. Actually, they are the ideal customers for any business, given their financial might.
The only purpose your focus on credit profile serves is that it reminds you that you are focusing on just the wrong thing.