Credit Cards and FICO Scores

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The other day, I got an email from CreditKarma, which is a website that monitors your credit score and credit activity. I live in Japan, so I really have no use for it, but I’ve always prided myself on my excellent score. I may not be good at handling my money, but the one thing I did right was using my credit card wisely.

I logged on to the site and found that my score was pretty good: 799 out of a possible 850. That put me  into the “Excellent” credit rating, which meant that if I were to take out loans, my interest rates should be low. This way, I could be saving lots of money on interest because  fewer percentage points to the lender means more money in my pocket.

Still, though, I am curious and a little miffed that my score wasn’t higher. I looked at the factors that affected my score and saw that the age of my credit lines was below average. Yes, I knew that. It was my fault for opening up a new credit card a couple of years ago. It affected the length of my credit history, bringing the average down.

The other factor lowering my score was my “Lack of Installment Loans.”

Wow. What a crock of shit.

So because I do not owe anyone any money and prefer to pay cash for everything else, it affects my credit. I find the idea laughable. I am personally very happy that I have the ability to pay cash for something that I want. I remember the stress and the psychological pressure of needing to pay off my student loans every month. This feeling always curbs my inclination to make big-ticket items like cars and homes.

We bought our car–new–with cash. It felt amazing. It gave us so much power when we were negotiating the price of the car down. And though I like to look at beautiful homes and condos online when I have free time, I always make sure that the home itself would be affordable and payable with cash. This is why I dream of owning a tiny home or an older apartment unit within our budget.

I am not a fan of installment payments and I am glad I don’t live in the US. I get that to make things more affordable, breaking down huge amounts into smaller chunks makes it easier to pay for things. But I’ve learned my lesson from my student loans. Sure the payments may be affordable, but they still need to get paid every month. Sometimes, the payments seem endless and it becomes discouraging if you feel like you’re not making a dent into that principal. I’ve crawled out of that hell so I would gladly save money and payoff something I want in cash in one payment instead. I don’t want to become a slave to recurring loans, mortgages, or car payments ever again.

So, I’ll take my 799 score and know that it won’t get higher because I don’t want recurring loans. I am okay with that. Instead, I have the full satisfaction of knowing that I will pay off something I want–in full–because I can do so.

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