At What Age Should You Stop Worrying About Credit Rating?
The simple answer to this question is at any age at which you no longer need credit to manage your life. That could be the day after your demise, whichever age that is or when that time comes that credit rating is the least of your concerns.
Of course, the other age would be when you have enough assets and income that borrowing money is not something you need to be doing.
This, of course, will be not achievable for most people. So let’s take a more realistic approach.
Credit rating systems are relatively new to the history of mankind and commerce. It is less than 50 years old. Yet, people define themselves by their credit rating and worry about it.
They judge themselves and others on their financial maturity and prowess based on a number. Yet, people are more than a number.
So what is this credit rating all about?
It is a score based on several factors that are created in a system called a FICO score.
The higher the score, it is believed that you are less of a lending risk and have high financial stability. However, it this really true?
There are many very rich people who have very poor credit scores because they do not use credit. However, for the rest of us, we need to have a decent credit score to get more debt.
Let me say that again, the purpose of a good credit score is to acquire more debt.
So if your desire is to be debt free, that is the age you do not need to worry about your credit score. Maybe for the purpose of buying a house, a car and one monthly credit card that you pay off every month you do not need to worry about your credit score.
Even when it comes to buying a car, you could do it another way without credit. Just have a monthly budget for your car payment. Pay that into your savings every month. When you have about $4,000 pay cash for an older car and keep making that same payment into your savings. When you have $10,000 in the car account, buy a nicer car with your $10,000 plus your trade-in value.
Just keep doing this every 12 to 19 months and within 7 or 8 years you will be paying cash for a new car. With this scenario, you did not need to borrow money or a car loan.
Credit score for small business owners
If you are a small business owner, then one could argue you are still in need of a good credit score. That is of course if you are personally signing for all business debt.
A better approach would be to get a business EIN number and work on building business credit. At some point, it is the business that borrows the money, not you personally.
So if you still need to buy on credit on any of the following you will need to be concerned about your credit score or credit rating.
- A house
- Refinance a house
- A new or used vehicle that you feel you cannot pay cash
- A monthly credit card
- Business credit for leveraging a return on investment
That is about it. Everything else should be cash as much as possible. So if you are at an age where you do not need credit for any of the above, then do not worry about your credit rating.
Do not let yourself get engulfed by the banks that want you to feel that you need them. The reverse is actually true. They need you to borrow to stay in business.
So the age you do not need to worry about your credit rating is the age that you do not need to borrow money. I trust that the younger you are that you reach that age, the better off you will be.