What does good credit do for you nowadays?

First off, before I go into details of answering the question, I am not implying that having good credit is not important. If you have a high credit score, that’s great. It will help you get a lower interest rate, get approved for certain things that lower credit score borrowers will not have access to, and you can tell the world you have a 700+ FICO score. But looking at the bigger picture, what does it really do for you?

Growing up, society taught us that having a great credit score got you anything and it did. But this has built a nation of credit dependent people that are trying to figure out how to get out of debt. As we go through these tough economic times, the ability to access credit will be harder to come by. So the mindset has to be different going forward.

Having good credit does allow you to buy a home. Traditionally, you were required to put down 20% on a property regardless of your credit score, but that changed over the years. Over the last few years, having good credit allowed you to get approved for 100% financing and buy a home for nothing down. Now due to the current financial crisis, banks and lending institutions are requiring borrowers to put more money down as they want to assume less risk.

I ask the question what does good credit do for you nowadays to a few friends and here are some of the responses:

“It gives me a higher interest rate:-(“

“Believe it or not... get a new job”

“Nothing at all. Liquid cash is the Key!!!”

“Credit was king that's how we got into this mess. Now debt free, that's the *&%”

“No disrespect! But, when was the last time you checked to try and find out if the company you worked for has good credit? Do they pay their bills on time? Just some food for thought. If you look at the game of monopoly, you only get credit when you don't have the money to play any more! Cash is Trump! Pay yourself first and have a savings then your bills. The nation is stressing to pay credit card companies that have gone bankrupt. Here is another one, Check and see if the servicing company that has your mortgage even has a copy of your deed. I bet they don't! We are getting mentally hustled!!”

I believe we still should focus on building a high credit score, but realize that good credit does not mean the same as it meant in years past as more credit card companies, banks, and financial institutions are less willing to lend due to the financial crisis. Even with great credit, lending institutions are not lending to buy a home, start a business, get a car, etc. etc without some considerable savings. Liquid cash is king with a catch. I believe we need to learn how to generate consistent capital while taking on less debt is the most important factor.


Remember I’m not a journalist, just a person with an opinion!