I paid $170,000 for an 800 FICO score.

Listen, before I spend the next 5 minutes slamming credit scores, FICO and the financial services credit card industry in general, I will admit that I was once amendment about having a high credit score:

I thought a high credit score was a meaningful indicator of financial success
I thought a high credit score was an indicator of upward mobility
I thought a high credit score was the pre-requisite to wealth

When I turned 18, I opened my first credit card with 1st Financial Bank, who gave me a whopping $150 credit line. Like a good consumer, I grew that line of credit and a few others to around a little over $100,000 of available credit over a keep year period.

Then I looked up at the age of 30 and asked my self: “Where the hell is all my money going?” This awesome line of consumer credit did not make me rich, produce any passive income, or act as a “catalyst” to wealth creation. Credit cards do the opposite. Credit cards keep the middle class, in the middle class and prevent the working poor from entering the middle class.

The most effective tool you and I have to create wealth is our income. Yet how are we supposed to ‘build wealth’ when the average American owes $5,700 and Californians owing $10,496!?? When your money is tied up in credit card and student loan payments, you can’t create wealth. I recently thought about how this applied to my personal life and came to the following conclusion: Credit cards serve no purpose in my life. I can live without credit cards. The idea that I need to ‘build credit’ to have a good life is a joke and fake reality brought to us by FICO.

Case in point: My 801 credit score.
This credit score cost me 14 years of credit card debt and $170,000 of student loans

I have $170,000 of student loan debt and an 801 credit score. Let that insanity sink in for one second. Your credit score is not a measurement of wealth. Your credit score is not a measurement of your success. Your credit score is not a measurement of how much money you make.

Your credit score is a measurement of your ability to pay debt.

Why do we want to build credit? So we can borrow debt. Why do we want to borrow debt? So we can build credit. Why do want to build credit? So we can borrow debt. This, ladies and gentlemen of the internet, is the credit score hamster wheel. I am closing *all* my lines of consumer credit over the next 2 months. You can see what happens to my FICO score here:

The blogs telling you to “build a good credit score”, all have credit card advertisements. They are not looking out in your best interest. You do not need to build a good credit score. You do not need any credit score. You can live a life within your means, without a credit card. Your personal visa debit card offers the same protection as a credit card. If you want to some day purchase a mortgage, you can get your mortgage manually underwritten.

Your credit card reward points don’t mean sh*t.

I average over $100,000 annually on an American Express card that converts points to gift cards and I get about $1,000 a year cash back. That’s one percent folks. $1,000 sounds great right? Well considering that consumers spend 10%-17% more on average w/ credit cards than with cash, it’s really a terrible idea. Think about it another way, American Express is paying me $1,000 at the end of the year for over-paying anywhere from $10,000 to $17,000. If I gave you $17,000, would you give me back $1,000 in 12 months? Absolutely not.

Conclusion: Make FICO think you’re dead.

If you want to go on vacation, pay with cash. If you’re tripping about hertz holding $500 from your bank account because you’re renting a car w/ your debit card, then dude, you can’t afford the vacation. Credit cards are the cigarettes of the financial services industry. It will kill you. It is killing all of us. 80% of Americans carry debt, and 20% of Americans have more credit card debt than savings . Build a life with no credit. Don’t accept the idea of “building good credit”. There is no such thing as good credit, because credit = debt. Use your income to create wealth, not pay debt. If you don’t, you’ll end up with an 800 credit score and $170,000 in debt.

4 thoughts on “I paid $170,000 for an 800 FICO score.

  1. I wouldn’t say the only reason we want to build credit is to get more in debt. Jobs, apartments and utilities all want to see a credit report, not cash. And the last part about a car rental holding money on your card, not everybody is renting a car because of vacations. I had to rent a car to drive home from out of state once and as a college student, I couldn’t afford a $300 hold on my debit card. Even today, I don’t EVER hold more than $100 in my checking, to protect my liquid assets from fraud. If my debit card is stolen or the numbers are stolen, they won’t get too far with $100. Credit cards are easier to erase fraudulent spending, at least easier than my local bank who can take up to 7 business days to refund you. If you’re using credit cards intelligently, you can use rewards to save money and build your credit score. Especially for home buying, the majority are going to need a mortgage one day and it’s best to build credit for that.

    1. Instead of saying “I can’t live without credit or debt”, ask yourself “How can I live without credit or debt?”. If you can’t afford a $300 hold on a car then you seriously can’t afford the car. Stop making excuses and own your reality. The line regarding your debit card being stolen is wrong. Debit cards offer the same protection as credit cards. Using “credit cards intelligently” is a joke. Credit cards are the most marketed product in the HISTORY of mankind. Study after study has shown that people who use their credit card for expenses pay on average 15% to 18% more than those who pay with cash. You “feel” the cash leaving your hands when you use it for discretionary spending, that friction does not exist with a credit card.

      Finally, you can get a mortgage without a credit score: it is called manually underwriting a loan and its quite common. All of the feedback you’ve provided represents the problem with the average American: an incredible amount of misinformation. If you accept that you “need debt to survive” you are truly doomed for a life of mediocrity in the middle class.

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