WEBVTT - Do I Need a Perfect Credit Score? #287 0:00:00.080 --> 0:00:02.960 Welcome to How the Money. I'm Joel and I and Matt. 0:00:03.279 --> 0:00:06.080 Today we're asking the question do I need a perfect 0:00:06.080 --> 0:00:27.840 credit score? Joel, I wonder if our answer to that 0:00:27.920 --> 0:00:30.440 question would be any different if you or I had 0:00:30.480 --> 0:00:33.320 a perfect credit score, which we don't. Well, I don't. 0:00:33.479 --> 0:00:35.040 I don't know about you, but I do not have 0:00:35.040 --> 0:00:37.400 a perfect credit score. Now, man, I'm not even close. Alright, good, 0:00:38.479 --> 0:00:40.879 I didn't know, if I know. Previously we had been like, 0:00:40.920 --> 0:00:44.440 all right, on three, tell your credit score? Uh, and 0:00:44.520 --> 0:00:46.240 I think I think our scores were pretty close, But like, 0:00:46.280 --> 0:00:47.640 I don't even know if we're gonna do that this time, 0:00:47.680 --> 0:00:50.960 because honestly, above a certain point, having a credit score 0:00:51.000 --> 0:00:53.320 that's that's higher than that it might matter some, but 0:00:53.360 --> 0:00:55.440 maybe not to the extent that a lot of people 0:00:55.560 --> 0:00:58.560 think it would. It doesn't nearly have the impact on 0:00:58.560 --> 0:01:01.760 our finances. That's a lot of people maybe wish it 0:01:01.800 --> 0:01:04.319 did if you were in that super super upper one 0:01:04.360 --> 0:01:06.200 percent of of folks that you know that have a 0:01:06.240 --> 0:01:08.679 perfect credit score. Yeah. Yeah, So it's an important thing 0:01:08.800 --> 0:01:11.160 to to consider, like how important is my credit score? 0:01:11.160 --> 0:01:13.520 We'll talk about that something today and then how high 0:01:13.640 --> 0:01:15.959 do I need to make sure it gets in order 0:01:16.000 --> 0:01:18.640 to have all the benefits of having solid credit and 0:01:18.720 --> 0:01:20.440 doesn't need to be perfect. You know. Well, we'll answer 0:01:20.520 --> 0:01:23.320 that question as well in today's episode. But Matt, before 0:01:23.319 --> 0:01:25.520 we get there, we recently mentioned that I kind of 0:01:25.560 --> 0:01:28.920 lost our competition that we weren't actually in, the one 0:01:28.920 --> 0:01:31.319 about keeping your phone the longest the cell phone battle. Yes, 0:01:31.680 --> 0:01:35.440 so congratulations again on winning. I recently sold No need 0:01:35.480 --> 0:01:38.920 to rub it in. I'm rubbing assaulted in my own 0:01:38.920 --> 0:01:41.000 wounds right now. But of course I sold my old 0:01:41.120 --> 0:01:43.600 cell phone because I don't want that hunkle junks just 0:01:43.600 --> 0:01:46.600 sitting around cluttering up my house when I can make 0:01:46.600 --> 0:01:48.600 a little bit of money from it. I made a 0:01:48.640 --> 0:01:52.320 whole seventeen dollars, so pretty impressive. And it's from a 0:01:52.320 --> 0:01:54.720 website that we mentioned not too long ago called sell 0:01:54.920 --> 0:01:57.080 sell dot com. Well, we'll post a link to that 0:01:57.720 --> 0:01:59.520 website in the show notes. But it's one of those 0:01:59.520 --> 0:02:01.800 things where if you have an old phone lying around 0:02:02.120 --> 0:02:04.840 that you're not using anymore because you upgraded, don't forget 0:02:04.880 --> 0:02:06.720 to get rid of your old electronics and to make 0:02:06.840 --> 0:02:09.440 money from them. Uh. Cell cell was just super easy 0:02:09.440 --> 0:02:12.000 because actually send you the envelope, you do a hard 0:02:12.000 --> 0:02:14.200 factory reset on your phone. You toss that phone in 0:02:14.240 --> 0:02:15.919 the envelope, you mail it off, and then you get 0:02:15.960 --> 0:02:18.200 a check or you get a PayPal deposit. So super 0:02:18.280 --> 0:02:20.440 chill way to go about, um getting rid of something 0:02:20.480 --> 0:02:22.200 that you don't need anymore and making some money off 0:02:22.200 --> 0:02:23.919 of it. Yeah, exactly, Well, I'm glad to hear you 0:02:24.000 --> 0:02:26.120 got your money. We did the same thing with Kate's 0:02:26.320 --> 0:02:29.680 uh most recent phone that she outgrew too big for, 0:02:29.880 --> 0:02:34.000 get too big for her photos, did get too big 0:02:34.040 --> 0:02:37.800 for Okay, it was only a sixteen gig storage phone 0:02:37.880 --> 0:02:40.079 or whatever. But I feel like for me, like what's 0:02:40.080 --> 0:02:42.359 difficult when it comes to something like this is I 0:02:42.440 --> 0:02:44.720 know that I could get more money by taking a 0:02:44.760 --> 0:02:47.440 little bit more time and selling it on eBay right. Uh. 0:02:47.440 --> 0:02:50.080 And that's where cell cell dot com that they make 0:02:50.120 --> 0:02:51.680 it so easy you hop on there. They've got a 0:02:51.680 --> 0:02:54.280 bunch of different sites listed out in what they're currently paying. 0:02:54.600 --> 0:02:56.680 It's an aggregator, which is nice. It's it's not you're 0:02:56.680 --> 0:02:58.359 selling just at that site. It's like you're seeing all 0:02:58.360 --> 0:03:00.240 the sites that want to buy your cell phone, and 0:03:00.080 --> 0:03:02.480 and they all make it super easy. Like I mean, basically, 0:03:02.560 --> 0:03:04.200 as long as you meet some certain a certain number 0:03:04.240 --> 0:03:06.880 of requirements, you send it off, and as long as 0:03:07.320 --> 0:03:09.760 those things are met, you get the money. And so 0:03:09.800 --> 0:03:12.360 they make it so stink and easy. But for me, 0:03:12.400 --> 0:03:13.919 I get hung up on the fact that I know 0:03:14.600 --> 0:03:17.040 that we could have gotten more money for her phone 0:03:17.080 --> 0:03:19.320 had I sold it on eBay right But after a 0:03:19.400 --> 0:03:21.520 quick search, what I quickly learned though, is that yeah, 0:03:21.560 --> 0:03:23.000 I would make a little bit more money, but not 0:03:23.080 --> 0:03:25.880 a ton more. I think the highest phone I saw 0:03:25.960 --> 0:03:28.400 going was like around fifty bucks, and so there's a 0:03:28.520 --> 0:03:30.920 chance that we could have sold it for something near there. 0:03:30.960 --> 0:03:32.880 Most likely it would have been closer to like thirty bucks. 0:03:33.440 --> 0:03:35.160 But then on top of that, yes, I could have 0:03:35.160 --> 0:03:36.640 gotten a little bit more money, but there would have 0:03:36.640 --> 0:03:39.480 been way more time involved with getting that money. And 0:03:39.520 --> 0:03:41.560 that's an important consideration. You need to know what your 0:03:41.560 --> 0:03:44.520 time is worth, and in my mind, taking the time 0:03:44.560 --> 0:03:46.640 to you know, shine it up, like make sure it's 0:03:46.640 --> 0:03:48.520 all nice and clean, getting a few photos of it, 0:03:48.720 --> 0:03:51.560 getting that listing up, maybe even answering questions, you know, 0:03:51.640 --> 0:03:53.280 like what you post something online. And when it comes 0:03:53.280 --> 0:03:55.160 to electronics, people are like, okay, hey, what's the battery 0:03:55.200 --> 0:03:56.760 life on that? And they're kind of checking in on 0:03:56.800 --> 0:03:59.560 all different sorts of things, even writing the listing, whereas 0:03:59.560 --> 0:04:01.960 you don't have to do that with a website where 0:04:01.960 --> 0:04:04.200 you're selling it. And so you're right, there's all this 0:04:04.320 --> 0:04:06.320 extra time involvement and is something you have to consider 0:04:06.400 --> 0:04:09.400 because is it worth you know, an extra hour to 0:04:09.480 --> 0:04:11.920 list that phone to make an extra ten bucks? Yeah, 0:04:11.920 --> 0:04:13.760 and in this case, no is the answer. And I 0:04:13.800 --> 0:04:15.320 would be willing to do it for something that's a 0:04:15.400 --> 0:04:18.160 higher dollar item. Like we talked recently not too long 0:04:18.200 --> 0:04:21.560 ago about a high end kind of luxury clothing item 0:04:21.640 --> 0:04:23.800 that we that was gifted to Kate that we sold 0:04:23.839 --> 0:04:26.000 on e Bay. You made like bucks on it, totally 0:04:26.000 --> 0:04:29.040 worth it or seven something, Um, but it's your ten bucks. 0:04:29.040 --> 0:04:30.960 I've don't move the needle that much exactly. And so 0:04:31.000 --> 0:04:33.360 in that case, yeah, we weren't gonna just like send 0:04:33.360 --> 0:04:34.800 that off to a site that is just gonna pay 0:04:34.880 --> 0:04:37.159 us pennies on the dollar for what it's actually worth. 0:04:37.200 --> 0:04:39.039 And so yeah, that's definitely something to keep in mind. 0:04:39.320 --> 0:04:41.560 It's better to get some money for for something like 0:04:41.600 --> 0:04:43.040 this and kind of get it out of your house 0:04:43.279 --> 0:04:45.120 than to sit on it thinking that like, well I 0:04:45.160 --> 0:04:47.920 could get more, but what are you actually going to do? 0:04:48.160 --> 0:04:50.159 I think for a lot of people taking the lesser 0:04:50.240 --> 0:04:53.760 amount of money but actually doing the thing, that's totally 0:04:53.800 --> 0:04:55.680 the way to go. Yeah, and especially think about this 0:04:55.720 --> 0:04:57.960 too with a cell phone. Every day it sits there, 0:04:58.000 --> 0:05:00.800 it becomes less valuable, so it is more and more 0:05:00.839 --> 0:05:03.560 obsoletely exactly. So, so if you say you're going to 0:05:03.640 --> 0:05:05.320 do it and you finally get around to it three 0:05:05.320 --> 0:05:07.279 months later, it might be worth just as much on 0:05:07.320 --> 0:05:08.960 eBay now as it would have been if you'd told 0:05:09.120 --> 0:05:11.599 the easy way three months earlier. So yeah, it's one 0:05:11.600 --> 0:05:13.400 of those things where what are you actually going to do? 0:05:13.440 --> 0:05:15.039 And if you're actually going to sell it on eBay 0:05:15.040 --> 0:05:16.840 and it's worth that time to you, then do it. 0:05:16.880 --> 0:05:19.520 By all means, get the highest dollar amount you can 0:05:19.640 --> 0:05:21.680 for your item. But if you're not going to at 0:05:21.760 --> 0:05:23.279 least go the easy route and make some money for 0:05:23.279 --> 0:05:25.360 your item. Yeah, and the thing is too. Three months 0:05:25.440 --> 0:05:27.160 later you look at the prices for it and you're like, 0:05:27.200 --> 0:05:29.600 oh crap, it's worth like absolutely nothing now. And then 0:05:29.640 --> 0:05:30.920 you go to one of the you go to cell 0:05:30.960 --> 0:05:33.719 cell and they're literally paying you like three dollars. So 0:05:33.760 --> 0:05:35.760 it's just like i've've already spent way too much time 0:05:35.800 --> 0:05:38.359 on this already. Yeah, you're overthinking it kind of I 0:05:38.400 --> 0:05:41.280 did recently with my entire inflation, just spending way too 0:05:41.400 --> 0:05:44.040 much time thinking about how much money you're paying, which 0:05:44.080 --> 0:05:46.039 is almost nothing to play your tigers. You're like, oh, 0:05:46.040 --> 0:05:47.640 if I'm not running this area and I can swing 0:05:47.680 --> 0:05:49.520 by the gas station, hit it at the right time. 0:05:49.600 --> 0:05:51.200 You need to have a dollar twenty five and change 0:05:51.240 --> 0:05:53.240 on hand. Yeah, you don't need to overthink it. It's 0:05:53.240 --> 0:05:55.799 amazing though, how somebody with, you know, a frugal mindset 0:05:55.839 --> 0:05:58.520 can obsess about things that really don't matter very much. 0:05:58.520 --> 0:06:00.080 And so yeah, this is one of those things, is 0:06:00.080 --> 0:06:02.760 where you can overthink it when you don't need to. Yeah, 0:06:02.800 --> 0:06:05.160 and that's the perfect segue. It's a credit scores. I mean, 0:06:05.360 --> 0:06:07.800 you know, having the perfect credit score. Do you actually 0:06:07.839 --> 0:06:10.279 need to have a perfect credit score? Are you overthinking it? 0:06:10.279 --> 0:06:11.800 We're gonna get to that here in a little bit. Yeah, 0:06:11.880 --> 0:06:13.480 let's first mention the beer that we're having on the show. 0:06:13.560 --> 0:06:16.680 This one's called Nuclear Sea Horse and it's by Boonshine Brewing. 0:06:16.960 --> 0:06:19.719 Big thanks to listener Christopher for sending this one our way. 0:06:19.760 --> 0:06:21.040 We'll give our thoughts on it at the end of 0:06:21.040 --> 0:06:22.880 the episode. But for now, Matt, let's get to the 0:06:22.880 --> 0:06:24.800 subject at hand. Let's ask the question and then talk 0:06:24.839 --> 0:06:27.240 about it. Do I need the perfect credit score? And 0:06:27.320 --> 0:06:30.960 perfection is something that sometimes we we strive for even 0:06:31.000 --> 0:06:34.280 though we know it's not achievable. Sometimes it just random 0:06:34.279 --> 0:06:37.200 areas of our lives. But it's easy to start to 0:06:37.240 --> 0:06:39.479 think about our finances is wanting to get them in 0:06:39.520 --> 0:06:41.760 a state of perfection as well, at least for Type 0:06:41.760 --> 0:06:44.480 A personalities or indiogram ones, you know, like those are 0:06:44.480 --> 0:06:45.960 the folks that are like, I need to have the 0:06:46.000 --> 0:06:48.160 perfect score for us seven So, like, we don't really 0:06:48.200 --> 0:06:51.240 care about that stuff. I'm not totally sure what I yet. Well, well, 0:06:51.240 --> 0:06:52.800 we'll get to the bottom of that one of these days, 0:06:52.839 --> 0:06:56.400 one of these days. But but honestly, still knowing that 0:06:56.440 --> 0:06:59.080 perfection is impossible doesn't really stop us from trying in 0:06:59.120 --> 0:07:01.799 some cases. And then in the case of our credit score, 0:07:02.200 --> 0:07:05.320 it's important to note that perfection is is almost impossible, 0:07:05.560 --> 0:07:07.520 but at the same time, having a great credit score 0:07:07.600 --> 0:07:10.960 is incredibly important in the modern financial age. So how 0:07:11.040 --> 0:07:13.960 much effort should we put into boosting our credit score 0:07:14.200 --> 0:07:17.320 taking it into the realm of perfection. That's an important 0:07:17.360 --> 0:07:19.680 question for us to ask so that we don't put 0:07:19.720 --> 0:07:22.120 too much effort into something that won't offer enough of 0:07:22.160 --> 0:07:24.000 a payoff for us. Um And that's what we're going 0:07:24.040 --> 0:07:26.200 to discuss in today's episode. We don't want it to 0:07:26.280 --> 0:07:28.720 be like the cell phone, where we put way too 0:07:28.800 --> 0:07:32.440 much effort into something for minimal extra return. Yeah, not 0:07:32.640 --> 0:07:35.520 knowing how high the credit score you actually need, uh, 0:07:35.600 --> 0:07:37.720 and then how much time you should you know, be 0:07:37.960 --> 0:07:40.200 be spending on it and thinking about it working towards 0:07:40.200 --> 0:07:42.520 a healthy score. That's the thing that we're gonna you know, 0:07:42.520 --> 0:07:44.920 really hone in on today. And some of our listeners 0:07:44.960 --> 0:07:47.360 who are digging into their personal finances, you know that 0:07:47.400 --> 0:07:50.120 they could actually be attempted to focus too hard on 0:07:50.160 --> 0:07:53.760 the credit score. Uh, maybe even leading to their overall detriment, 0:07:53.800 --> 0:07:56.080 you know. And so yeah, how do you know when 0:07:56.120 --> 0:07:59.840 your credit score is good enough? Let's dig in. But yeah, 0:08:00.040 --> 0:08:03.160 us though, we've got some thoughts on why you should 0:08:03.200 --> 0:08:07.400 actually be spending less time thinking about your credit score. Yeah. Yeah, 0:08:07.440 --> 0:08:10.280 overall you should actually be spending less of your life, 0:08:10.560 --> 0:08:13.640 less of your energy thinking about your credit score. When 0:08:13.760 --> 0:08:15.320 we spend too much time on our credit score, we 0:08:15.360 --> 0:08:18.440 actually lose sight of the bigger picture right in pursuit 0:08:18.480 --> 0:08:22.840 of the perfect the unattainable or almost unattainable, which is 0:08:22.920 --> 0:08:25.720 the max credit score on the Pico scale. If it 0:08:25.720 --> 0:08:28.560 did sound effects like, that's when the uh kind of 0:08:28.600 --> 0:08:31.640 like the course of Angels would come in right exactly. 0:08:31.640 --> 0:08:34.840 What that's perfection, right, Yeah, that's nirvana. That's the halo 0:08:34.840 --> 0:08:37.280 on top of your credit score right there. But if 0:08:37.280 --> 0:08:39.960 we're seeking that eight fifty, if we're going too hard 0:08:40.200 --> 0:08:42.000 after the perfect score, it could cause us to get 0:08:42.080 --> 0:08:46.520 lax on. Actually, other more important aspects of our personal finances, 0:08:46.559 --> 0:08:49.360 like our larger money goals and ramping up our ability 0:08:49.400 --> 0:08:51.640 to earn more, cutting back on our spending, like those 0:08:51.640 --> 0:08:54.480 are the things that have the biggest impact on our 0:08:54.480 --> 0:08:56.960 personal finances. Really, when it comes down to it, what's 0:08:56.960 --> 0:08:59.400 the point of increasing your score by ten or twenty 0:08:59.440 --> 0:09:01.760 points if it's keeping you from being able to focus 0:09:01.800 --> 0:09:04.240 on excelling at work and getting that huge race, or 0:09:04.280 --> 0:09:07.559 if it's causes you to to go on spending venders 0:09:07.679 --> 0:09:09.520 is a way to treat yourself because you've put in 0:09:09.800 --> 0:09:12.440 so much effort in in this one particular area. I 0:09:12.440 --> 0:09:15.559 don't think we're necessarily defining a huge segment of our 0:09:15.559 --> 0:09:17.880 listeners amount of people who obsess about their score to 0:09:17.920 --> 0:09:20.360 this extent. But I do think it is a problem 0:09:20.440 --> 0:09:22.559 because a credit score can be so tangible and it's 0:09:22.559 --> 0:09:24.880 so easy to track. Now, some people do get a 0:09:24.880 --> 0:09:27.480 little too obsessed about it um and it can cause 0:09:27.520 --> 0:09:29.760 them to put less emphasis on the things that actually 0:09:29.800 --> 0:09:32.440 matter the most. Yeah, I mean, even aside from financial 0:09:32.559 --> 0:09:35.000 like the bigger financial goals, to just like personal life goals, 0:09:35.000 --> 0:09:37.000 you know. Like I think there could be some instances 0:09:37.040 --> 0:09:39.920 of maybe some super nerds out there who are letting, 0:09:39.960 --> 0:09:41.800 like their credit score maybe get in way of like 0:09:41.840 --> 0:09:44.480 their personal life like relationships where they're just like, oh, sorry, 0:09:44.480 --> 0:09:46.200 I need to I don't I can't go on this 0:09:46.200 --> 0:09:48.240 trip because I need to make sure I'm I've got 0:09:48.240 --> 0:09:50.160 to put that charge on this this other credit card, 0:09:50.320 --> 0:09:52.440 you know, like as far as manipulating and making sure 0:09:52.480 --> 0:09:54.920 that your ratios are all right and things like that, that, 0:09:55.080 --> 0:09:57.240 coupled with just the additional stress of having to think 0:09:57.280 --> 0:10:00.559 about it not worth it right, striving after higher scores 0:10:00.600 --> 0:10:03.120 could also just make you vulnerable to scammers. There are 0:10:03.160 --> 0:10:06.160 a lot of services out there touting their ability to 0:10:06.360 --> 0:10:09.240 immediately boost your score. Credit scores were sort of like 0:10:09.240 --> 0:10:12.640 this low hanging fruit that companies are going after to 0:10:12.760 --> 0:10:14.600 get their hands on your money. And so you know, 0:10:14.640 --> 0:10:16.800 while you are working on your score, do you do 0:10:16.840 --> 0:10:18.600 want to make sure that you avoid anyone asking you 0:10:18.760 --> 0:10:21.600 for money to help you with your score. Working to 0:10:21.720 --> 0:10:24.440 raise your credit score, it's a long road, and it's 0:10:24.480 --> 0:10:26.679 not something that you should just throw some money at 0:10:26.679 --> 0:10:29.319 force some immediate results. Yeah, it can be tempting, but 0:10:29.360 --> 0:10:31.040 at the same time, those people usually take your money 0:10:31.080 --> 0:10:34.160 and run and your score stays put um and and 0:10:34.200 --> 0:10:35.959 so to highlight the fact that it takes a while, 0:10:36.040 --> 0:10:38.360 Matt I thought it was actually important for us to 0:10:38.480 --> 0:10:41.559 talk about what's usually involved to get a credit score 0:10:41.559 --> 0:10:44.400 that's over eight hundred. And I think this will highlight 0:10:44.720 --> 0:10:48.000 for our listeners maybe the futility at least in seeking 0:10:48.080 --> 0:10:50.839 a perfect credit score. Typically you need to use less 0:10:50.880 --> 0:10:54.160 than seven percent of your available credit limit, have no 0:10:54.400 --> 0:10:56.880 late payments in the last seven years, and have a 0:10:56.960 --> 0:11:00.400 twenty five year credit history. So for our younger listeners 0:11:00.400 --> 0:11:03.080 in particular, it's really not even possible unless you know, 0:11:03.120 --> 0:11:04.560 when you were a baby, your parents may do an 0:11:04.559 --> 0:11:06.440 authorized user on a couple of credit cards and they've 0:11:06.440 --> 0:11:07.960 been handling it well. I mean, it's just like we've 0:11:07.960 --> 0:11:10.400 done recently with for our kids. We want to set 0:11:10.440 --> 0:11:12.840 them up for having good credit in the future. But 0:11:12.880 --> 0:11:16.120 that's one of those things. Yeah, that, Uh, it's almost unachievable. 0:11:16.120 --> 0:11:18.760 It's essentially impossible for a lot of people unless for 0:11:18.800 --> 0:11:21.040 a couple of decades or longer you've been handling your 0:11:21.040 --> 0:11:24.080 money really, really well and been paying special attention to 0:11:24.120 --> 0:11:26.959 that credit score. Yeah. So while striving after that perfect 0:11:27.000 --> 0:11:29.080 credit scores and something that we would recommend your your 0:11:29.080 --> 0:11:31.440 credit score, like, having a healthy credit score is still 0:11:31.840 --> 0:11:34.480 an important piece of the personal finance puzzle, you know. 0:11:34.840 --> 0:11:36.800 So even though a lot of listeners might be years 0:11:36.800 --> 0:11:40.000 away from maybe even getting into the eight hundreds, Uh, 0:11:40.000 --> 0:11:43.360 it's still really important to start working towards a healthy 0:11:43.360 --> 0:11:46.360 credit score. And so why is it actually really all 0:11:46.360 --> 0:11:48.920 that important? After the break, we will dive into it. 0:11:57.880 --> 0:11:59.880 All right, we're back from the break, and Matt, we 0:12:00.080 --> 0:12:01.800 just kind of made a point for why people should 0:12:01.800 --> 0:12:04.880 be spending less time thinking about their credit score. Now, 0:12:05.120 --> 0:12:06.959 let's quickly make the opposite point. That's what I love 0:12:07.000 --> 0:12:10.480 to do. Point counterpoint, go back and forth, Obviously, there 0:12:10.520 --> 0:12:14.000 are several reasons why you should be working to increase 0:12:14.000 --> 0:12:16.840 your credit score, even while at the same time perfection 0:12:17.120 --> 0:12:19.439 isn't something you should be striving for. First of all, 0:12:19.520 --> 0:12:21.720 a higher score really does show that you're doing a 0:12:21.760 --> 0:12:24.360 decent job managing your money. Your ability to make payments 0:12:24.360 --> 0:12:27.440 on time demonstrates that you're at least avoiding late payments, 0:12:27.600 --> 0:12:30.280 plus those awful penalty a p rs, you're not paying interest. 0:12:30.520 --> 0:12:33.920 So that credit score is essentially a snapshot picture of 0:12:34.000 --> 0:12:36.080 the kind of person you are, how reliable you are 0:12:36.120 --> 0:12:39.079 when it comes to handling your debts and handling your money. Yeah. Yeah, 0:12:39.080 --> 0:12:40.920 it's a good indicator for what you're doing with your 0:12:40.920 --> 0:12:45.640 money now, although it's not like a like a comprehensive report, right, 0:12:45.720 --> 0:12:47.280 and like it makes me think of like maybe a 0:12:47.320 --> 0:12:49.440 good metaphor is like a speed limit, and so if 0:12:49.480 --> 0:12:51.640 you follow the law, you stay within the speed limit. 0:12:52.280 --> 0:12:54.800 That doesn't necessarily mean that you are an excellent driver, 0:12:55.080 --> 0:12:57.200 but at least you're doing this one thing, right, Like, 0:12:57.240 --> 0:12:59.480 there's a good chance, like you're less likely to get 0:12:59.520 --> 0:13:01.960 an accident if you're going to speed limit versus twenty 0:13:02.040 --> 0:13:05.320 or thirty over. But having a good credit score, just 0:13:05.360 --> 0:13:06.960 like in the same way that following the speed limit 0:13:07.000 --> 0:13:09.839 doesn't make you a great driver. Having a great credit 0:13:09.880 --> 0:13:11.840 score doesn't mean that you're doing a really good job 0:13:11.880 --> 0:13:15.160 saving four retirements, that you're achieving your your financial goals. 0:13:15.480 --> 0:13:17.320 But it is kind of a like you said, like 0:13:17.320 --> 0:13:19.280 a snapshot. It's a good indicator for us to kind 0:13:19.280 --> 0:13:21.640 of measure ourselves up against here and there. It can 0:13:21.720 --> 0:13:25.679 mean that you're just not totally screwing things up. Yeah, exactly, 0:13:25.720 --> 0:13:27.800 which which honestly, like, if you're a lender, that's what 0:13:27.840 --> 0:13:29.480 you want to know. Does this person screw things up? 0:13:29.679 --> 0:13:32.080 And the credit score is a good indication of that, 0:13:32.120 --> 0:13:34.720 You're right, it's not always an indication for the positive 0:13:34.760 --> 0:13:37.440 that this person is like doing awesome with their savings investments, 0:13:37.440 --> 0:13:39.719 when it just means, man, this person is not completely 0:13:39.920 --> 0:13:42.120 ruining their life when it comes to Debton credit. Yeah, Yeah, 0:13:42.120 --> 0:13:45.000 they're good enough right now. Yeah. And obviously aside from that, 0:13:45.040 --> 0:13:47.080 you know, one of the most straightforward benefits of having 0:13:47.080 --> 0:13:51.400 a higher score means better interest rates when borrowing. Hopefully 0:13:51.480 --> 0:13:53.800 you aren't borrowing too much money, but when you do 0:13:53.920 --> 0:13:56.800 need a loan, having a top tier credit score will 0:13:56.920 --> 0:13:59.400 ensure that you get the best terms, which means that 0:13:59.440 --> 0:14:02.160 you'll pay less. And so getting a more favorable interest 0:14:02.240 --> 0:14:04.600 rate is actually a big deal here, right, And so 0:14:04.640 --> 0:14:07.760 for example, on a three thousand dollar home, having a 0:14:07.840 --> 0:14:10.960 higher credit score could easily mean scoring an interest rate 0:14:11.120 --> 0:14:14.200 that is maybe a half a percent lower, which means 0:14:14.280 --> 0:14:17.760 paying about twenty five dollars less over the life of 0:14:17.760 --> 0:14:20.280 a thirty year mortgage. Uh. This is maybe just a 0:14:20.280 --> 0:14:22.280 way for folks to see that, Like, no, your credit 0:14:22.320 --> 0:14:25.040 score impacts interest rates that you pay, and the interest 0:14:25.120 --> 0:14:27.240 rate that you have directly correlates with the amount of 0:14:27.240 --> 0:14:29.000 money that you're going to spend for something like this, 0:14:29.040 --> 0:14:31.080 And so this is real money. It has a real 0:14:31.120 --> 0:14:33.360 impact on our finances. Yeah, and when you're talking about 0:14:34.040 --> 0:14:37.040 dollars over thirty years, that's closing in on a thousand 0:14:37.080 --> 0:14:39.080 dollars a year or a hundred dollars a month. Let's 0:14:39.120 --> 0:14:41.040 say it's ninety bucks a month. I mean, who couldn't 0:14:41.120 --> 0:14:43.200 use that back in their back in their life. And 0:14:43.280 --> 0:14:45.280 so much of that comes down to your credit score. 0:14:45.880 --> 0:14:48.000 What you'll pay for insurance is also affected by your 0:14:48.000 --> 0:14:50.800 credit score, to at least in most states. Some states 0:14:50.880 --> 0:14:53.640 don't allow or at least severely limit the usage of 0:14:53.720 --> 0:14:56.200 the credit score and factoring premiums. If you live in 0:14:56.200 --> 0:15:00.840 like California, Hawaii, Maryland, Massachusetts, Michigan, Oregon, in Utah, those 0:15:00.880 --> 0:15:03.320 are the only states where your credit score won't impact 0:15:03.320 --> 0:15:05.720 what you pay for car or homeowners insurance, or is 0:15:06.000 --> 0:15:08.760 at least legally not allowed to impact it. But in 0:15:08.760 --> 0:15:11.040 in most of the other states it is a factor. 0:15:11.080 --> 0:15:14.240 And so your credit score will partially at least determine 0:15:14.400 --> 0:15:17.120 in addition with other factors like your age and driving history, right, 0:15:17.160 --> 0:15:19.840 it will determine the rates that you're paying. And again 0:15:20.040 --> 0:15:22.560 we talked about ninety bucks a month maybe for your 0:15:22.600 --> 0:15:25.280 home mortgage, This could be ninety bucks or more a 0:15:25.360 --> 0:15:28.160 year on your homeowners and car insurance. So it's one 0:15:28.160 --> 0:15:30.720 of those things that having a good credit score will 0:15:30.760 --> 0:15:33.480 save you money in that realm too, right. Yeah. In 0:15:33.520 --> 0:15:36.280 addition to that, your employment can even be subject to 0:15:36.440 --> 0:15:40.000 having a good credit score. Stats show that twenty of 0:15:40.080 --> 0:15:43.320 human resource professionals that they check your credit history when 0:15:43.400 --> 0:15:46.320 hiring for a position. Uh, they won't have access to 0:15:46.320 --> 0:15:49.000 your actual score, but your report is what they have 0:15:49.040 --> 0:15:51.800 access to, and that is what essentially informs your credit score. 0:15:52.040 --> 0:15:55.000 Right and so you're responsible handling of credit or or 0:15:55.120 --> 0:15:58.160 like thereof could have an impact on the job offers 0:15:58.160 --> 0:16:01.440 that you receive, in particular jobs that have security clearances 0:16:01.480 --> 0:16:03.040 attached to them as well. They don't want you to 0:16:03.120 --> 0:16:06.360 be blackmail herble. So all these ways, right, whether it's employments, 0:16:06.560 --> 0:16:09.720 the amount you're paying for your homeowners or car insurance, 0:16:10.320 --> 0:16:12.280 or the rate that you get if you're buying home, 0:16:12.560 --> 0:16:14.800 all these things are are impacted by your credit score 0:16:14.800 --> 0:16:16.360 by this one number. So it makes sense that this 0:16:16.440 --> 0:16:18.760 is something that, yes, we should be paying attention to, 0:16:18.920 --> 0:16:21.200 but doesn't need to be perfect. Joel, No, no, it 0:16:21.200 --> 0:16:24.000 doesn't know, it doesn't need to be perfect, But you're right, 0:16:24.000 --> 0:16:25.320 it is something that that we do need to pay 0:16:25.360 --> 0:16:27.800 attention to. And so I guess it's important now to 0:16:27.800 --> 0:16:31.160 start talking about, well what is a good score? What's 0:16:31.160 --> 0:16:34.840 good enough? If perfection isn't needed, but we do need 0:16:34.880 --> 0:16:36.840 to pay enough attention to make sure our credit score 0:16:36.880 --> 0:16:39.280 is in a good range. Well what is a good range? 0:16:39.680 --> 0:16:43.560 And first it's important to say it can be complicated. 0:16:44.960 --> 0:16:47.880 It's about a nice non answer for you, Well, it's yeah, 0:16:47.920 --> 0:16:49.520 it's not an easy answer. And part of the reason 0:16:49.600 --> 0:16:51.280 it's not an easy answer is because there are so 0:16:51.320 --> 0:16:54.440 many different credit scores out there, right, that there's not 0:16:54.720 --> 0:16:57.600 just one. FICO is the main credit score, and it's 0:16:57.600 --> 0:16:59.120 the one, Matt, you and I talked about the most 0:16:59.160 --> 0:17:02.320 because it's it's the most widely used. But the Vantage 0:17:02.320 --> 0:17:04.760 score is another really popular one put up by another 0:17:04.840 --> 0:17:07.800 credit scoring company, and and there are other well known 0:17:07.840 --> 0:17:11.000 reputable systems as well. But even Fico, Matt, when you're 0:17:11.040 --> 0:17:13.840 boiling that down, they've got different versions of the FICO score. 0:17:14.000 --> 0:17:17.119 And so you think currently we're on PICO eight nine. Yeah, 0:17:17.160 --> 0:17:19.760 it's like it's literally the eighth iteration. I think it is. Yeah, 0:17:19.760 --> 0:17:22.360 They're always launching new ones, and different lenders will use 0:17:22.560 --> 0:17:26.480 either the most recent or maybe one generation older FICO score, 0:17:26.600 --> 0:17:28.640 so we can be confusing. Yeah, I prefer the Legacy 0:17:28.680 --> 0:17:32.560 five edition. That was good. It was like Windows Man 0:17:32.760 --> 0:17:35.679 so great. Uh, but I think you know all that 0:17:35.720 --> 0:17:38.080 meaning said, It can make it kind of crazy for 0:17:38.080 --> 0:17:41.200