5 Reasons Why Your Credit Score Matters Less Than You Think It Does
By Camilo Maldonado | Jun 30, 2020
When I was an 18-year-old, back in 2007, the only thing I knew about money besides the fact that I had very little of it, was that it was important to have solid credit.
I didn't have a large extended family or anyone to rely on to co-sign an apartment or loan agreement, so I was in a rush to get excellent credit as soon as possible.
Establishing credit early is important, but starting to save and invest for retirement is more important.
Shortly after I turned 18, I went out and applied for my first credit card. It was a Chase Freedom card, which at the time was targeted to young adults. My initial credit limit was $300, and I was elated. I remember holding it in my hands and hardly believing I had a credit card with my own name on it.
Growing up in poverty, I was afraid to use it because I didn’t want to owe someone money I couldn’t afford to repay. I used it sparingly for that reason.
Reflecting on my early days with a credit card, I now realize that I did everything perfectly to build phenomenal credit. I still have that original Chase Freedom account open and my credit limit is now $10, 000. You can see the details below.
Even though I worked so hard to build solid credit and now boast a credit score over 800, I now realize I would have been better off by focusing on a few other things instead.
For example, as a 22-year-old recent college graduate, I had one of the strongest credit profiles of anyone I knew. Yet when I started working I didn't know what a 401(k) or an IRA was. Both would have been much more valuable to me now than a strong credit score. Unfortunately, it's hard to make up for lost time with retirement accounts like Roth IRAs.
Your Ability To Make Smart Purchases Is Critical
When I graduated from college I started paying for my own phone bill. I remember proudly calling AT&T to transfer my account to my own name and leaving my family plan.
I felt like I was being responsible by paying my own bill and being an independent adult. The problem was I didn't compare prices or find the best deal. I simply kept the same account out of convenience.
Today there are tons of alternatives so that you no longer need to pay for the most expensive phone ...