During the past 20 years, I may have checked my credit score three times. Truth moment! This is a topic I have not cared much about since making the decision to live debt-free. My wife and I have not had a conversation (that I can recall) about credit scores in over a decade. Don’t misunderstand, we talk about money all the time but not credit (that money belongs to someone else). If you are curious, my score is 818. The highest FICO score is 850.
After learning my three-digit number, I began to wonder why it remains so high although I have no debt. Here is my assumption. During a summer internship with Wachovia bank in 1994, I signed up for a credit card. I am sure someone at the bank probably said, “You need this so you can start building credit.” Sound familiar? Although Wachovia bank was purchased by Wells Fargo in 2008, my credit history started 23 years ago. My credit card company sent a letter recently which stated:
As a reminder, a FICO score consists of the following:
• Payment History – 35%
• Credit Utilization – 30% (percentage of credit available that has been borrowed)
• Length of Credit History – 15%
• New Credit – 10%
• Types of Credit – 10%
After my wife and I paid off our mortgage, we established a home equity line of credit (HELOC). It has never been used and I’m 99.9% sure it never will. I have only two credit lines on my credit report, a credit card and a HELOC.
I think my credit score is over 800 because my available credit is very high; however, my utilization rate is 0%. There you have it. My ability to borrow but lack of borrowing due to my debt-free living choice may be the #1 way most people have not tried to improve their credit score.
View this video for a simple 4-step process to eliminate debt