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How do you know if you’re getting advice from someone who truly has their finances in order? Or is their guidance shaped by financial stress or desperation?
In our seminars, we tell attendees they can ask any of our speakers or teachers to see a copy of their credit report or credit score as one sign of wise financial stewardship. While a credit score isn’t a perfect measure, it provides a helpful data point about a person’s financial habits.
Do Credit Scores Matter?
The answer is: it depends.
- If you’re buying a house or planning to borrow money, a credit score can be very important.
- If you are financially independent and don’t anticipate needing credit, then your score may not matter much.
Dave Ramsey calls it the “I love debt” score. It primarily shows how well someone manages debt. Credit scores mainly matter when debt is involved, such as taking on a mortgage, which is a common step for aspiring homeowners.
When and Why Credit Scores Matter
1. Getting a Loan
- A higher credit score can mean lower interest rates.
- A lower score can result in no loan approval or higher interest rates.
2. Applying for an Apartment
- Landlords often run credit checks to assess your payment history.
- Bankruptcies, collection accounts, or late payments may result in denial or higher rent.
3. Applying for a Job
- Some employers check credit reports. Poor credit could affect job offers.
What Your Credit Score Reveals
- A high credit score does not automatically indicate wise stewardship. It shows that you consistently manage debt within the rules of the lending system. Responsibility ≠ wisdom.
- Low credit scores often reflect late or missed payments, suggesting potential poor stewardship.
- Sometimes errors or fraud can unfairly lower your score, even if you are a diligent steward.
Best Practices for Credit Management
- Check Your Credit Report Regularly
- Especially if you use credit cards or loans, to catch errors or fraudulent activity early.
- Don’t Idolize Your Credit Score
- Wise financial moves, like paying off and closing unnecessary credit cards, may temporarily reduce your score.
- Don’t avoid doing the right thing for a minor, short-term impact.
- Freeze Your Credit
- For those with stable housing, careers, and no anticipated need for debt, freezing your credit helps protect against identity theft.
Who Really Needs a Credit Score?
Credit scores matter most to banks and lenders—they are one of the primary tools used to measure risk. For individuals living debt-free, the score is far less relevant.
- Perfect measure of stewardship? No.
- Useful data point? Yes.
Application
Check your credit report this week—not to obsess, boast, or panic, but to gather a data point for stewardship.
Ask yourself:
- Why do I care about this number?
- Is it pride?
- Is it fear?
Then take one wise action:
- Pay off a lingering balance
- Set up autopay
- Freeze your credit
- Close an unnecessary account
- Build a plan to never need debt again
Remember: Your credit score is not your identity or your righteousness. It is not your security. It is simply a metric banks use to measure risk.
Next Steps
- Take advantage of our free personal stewardship reviews so you can take your next steps to being a better steward.
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The topics discussed in this podcast are for general information only and are not intended to provide specific investment advice or recommendations. Investing and investment strategies involve risk including the potential loss of principal. Past performance is not a guarantee of future results.
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