Beware of Your Credit Score

20 Mar 2017 Karina S. Henkel

This was something I was well aware of when I moved here: I needed to get a good credit score in order to become a fully valuable person in American society. If you have a bad credit score banks won’t give you bank accounts, credit cards, or loans in case you should need one for purchasing a car or a house. I knew when I arrived in the US, banks and all money-related institutions catergorized me   at the financial level of an 18 year old high school kid. I had to earn my credit score like these kids. And how do you earn a good credit score in the US: By going into debt. But you can’t go into debt if you have a bad credit score. This is a weird system.

I went to one of the bigger banks that is also set up to deal with international money transfers and applied for a credit card. I was not surprised when my application got rejected because of my horrendous credit score, but they offered me a secured credit card. I paid $2,000 into an account and was allowed to use my credit card against this account. I had to carefully replenish this account in advance in order to be able to pay with this card. There was no credit involved. But the bank told me this card would help me to build a credit score. After two years they exchanged my secured credit card with a normal credit card, but I got the advice to get a second credit card in order to build up more debt and therefore a better credit score.

The concept that I had to get into debt in order to get a good credit score which would enable me to get into more debt was very foreign to me.

Last week I talked to a former colleague of mine. He is retired and lives with his wife and two dogs on a boat traveling up and down the American coasts year round. He told me that he has the worst credit score that exists because he never took out a loan. He  only bought something when he had the money on hand. He only got a car when he had the money for it. He paid his houses and his boats with cash. He was always a highly salaried engineer and apparently didn’t have to rely on loans in order to get what he needed.  Even to this day he refuses to get a credit card. He does not see the point in it when he can pay cash or by debit card.

I was surprised to hear that. I thought that this way of life is not possible in the US, but it is. My conversation with him made me think that I shouldn’t stress out so much about my credit score. Apparently a life in America is possible even without a credit score at all.