I have seen a number of questions about improving or checking your credit score / history. I think a Wiki would be a good idea to deal with these questions. My feeling is there that you shouldn't worry about credit score, but about staying out of debt. The score will take care of itself.

Correct me if I'm wrong, but there are three useful loans you can obtain:

  • Student loan - Investing in your future (How much should be the maximum?)
  • Mortgage - Most people don't have the money to buy a house and it's tax deductible.
  • Business - Investing in your future. Risky business, and don't mortgage your house if you can avoid it.

All other possible debts should be avoided, especially credit card debt.

So, why do people fuss about credit score?


The credit score is a useful tool for companies, no doubt about it. This is a question about why people spend time and effort at getting a better score.

  • Similar, but not quite: money.stackexchange.com/questions/3415/… Commented Oct 22, 2010 at 11:53
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    This is kind of a meta question. In that it's a call for action that we as a community take charge to lay out the basics of one of our main subjects to avoid and remove duplicate questions.
    – SpecKK
    Commented Oct 22, 2010 at 16:36
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    @GUI tags support wiki info, so if there's a canonical bunch of info you'd want there, you can add it: money.stackexchange.com/questions/tagged/credit-score Commented Oct 23, 2010 at 22:15
  • There are 39 questions tagged...
    – GUI Junkie
    Commented Oct 24, 2010 at 15:48
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    I'm reminded of the movie Brazil, where as a character is about to be tortured by the state interrogators a sympathetic guard whispers "don't hold out too long - it'll affect your credit rating". Commented May 19, 2011 at 13:33

9 Answers 9


Simply staying out of debt is not a good way of getting a good credit score. My aged aunt has never had a credit card, loan or mortgage, has always paid cash or cheque for everything, never failed to pay her utility bills on time. Her credit score is lousy because she has never had any debts to pay off so there is no credit history data for her. To the credit checking agencies she barely exists. To get a good score (UK) then get a few debts and pay them off on time.

  • This explains what the fuss is about. If you need to buy a house, for example and you don't have a good credit score because you've never needed any debt... you're f*cked.
    – GUI Junkie
    Commented Oct 27, 2010 at 19:02

Since we seem to be discussing credit score and credit history interchangeably, if I can add credit report as the third part of the puzzle, I have another point.

Your credit score and credit report can be effective tools to notice identity theft or fraud in your name.

Keeping track of your report will allow you to not only protect your good name (which is apparently in dispute here) but also those businesses who ultimately end up paying for the stolen goods or services.


Your credit score, for better or worse, is increasingly about more than just getting loans. For example insurance companies can use it to some extent to determine your rates,.


I justed rented a new house, and they ran my credit to see if I am a reliable person.

  • This doesn't happen where I live (Spain), at least I think not. Is this solely USA or does it also affect the UK, Europe in general? Talking about a kind of public credit score or history.
    – GUI Junkie
    Commented Oct 22, 2010 at 22:29
  • Most states in Europe don't have a central credit score as far as I know. In Germany there is the Schufa which will collect data on dept you currently have and whether you pay on time or not, etc. but as soon as you payed your dept back the data has to be deleted within 3 years. It is more common to just look at the current financial situation of an individual. Commented Oct 29, 2010 at 15:29
  • @GUIJunkie Every apartment I've rented and every salaried job I've taken has checked my credit score. I also had a credit inquiry when getting a background check to get additional security clearance at my job. (US)
    – Rag
    Commented Nov 22, 2018 at 0:19

If human beings were Homo Economicus, i.e. textbook rational and self-interested economic-minded beings, as opposed to simply human, then yes, simple advice like "just stay out of debt and your credit score will take care of itself" could work. Your simplification would be very persuasive to such a being.

However, people are not perfectly rational. We buy something we shouldn't have, we charge it on a credit card, we can't afford to pay it off at the end of the month. We lose our job. Our furnace breaks down, or our roof leaks, and we didn't anticipate the replacement cost. Some of this is our fault, some of it isn't – basically, shit happens .. and we get into debt... maybe even knowing all the while we shouldn't have.

Our credit history and score takes a hit. Only then do we find out there are consequences! Our interest rates go up, our insurance companies raise premiums, our prospective new employers or landlords run credit checks and either deny us the job or the apartment.

Telling a person who asks for help about their credit history/score that they shouldn't have taken on debt in the first place is like telling the farmer he should have kept the barn door shut so the horse wouldn't run out. While it is not "bad" advice, it's not the only kind of advice to offer when somebody finds themselves in such a situation.

Adding advice about corrective actions is more helpful. The person probably already know that they shouldn't have overspent in the first place and got into debt. Yes, remind them of the value of being sensible about debt in the first place – it's good reinforcement – but add some helpful advice to the mix. e.g. "So you're in debt. You shouldn't have lived beyond your means. But now that you are in this mess, here's what you can do to improve the situation."

  • Also, we're getting some really good answers about what's affected by the credit score; apart from loans, insurance and renting. So, the next question is: does everybody have a credit score? And if you only get a credit score after you take a loan, then there is something rotten in the system. Let's say you never had a credit card, nor any loan and you want to buy a house... what happens then? And again, does this only affect the USA?
    – GUI Junkie
    Commented Oct 23, 2010 at 14:18
  • @GUI Junkie: If you were lending money to someone, would you want to give your money to someone who has no history of paying things on time, or someone with a track record of meeting their obligations. The moral arguments about debt are irrelevant, the essential question that a credit score answers is "Does this person do what they say they will do?" Commented Oct 24, 2010 at 3:13
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    I'm not arguing against the credit score, but against people trying to achieve a better score against their own character and even against their own best interest.
    – GUI Junkie
    Commented Oct 24, 2010 at 11:31
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    @GUI Junkie - what about people who are in the process of paying down debt, who have become financially responsible? What about a young adult just starting out who wants to make sure he or she doesn't make any unknown mistakes affecting credit score? There can be valid reasons that aren't just more rope to hang yourself with.
    – justkt
    Commented Oct 24, 2010 at 13:07
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    @GUI Junkie - we shouldn't assume that people who report to credit agencies are perfect, we have to check to make sure they are telling the truth and being fair.
    – MrChrister
    Commented Oct 25, 2010 at 17:36

This question is correct, in the sense that if you truly never wish to take any kind of debt, you do not need to care about your credit score. I will assume a rational person who doesn't generally need loans and managed finance well.

The flaw however is it may be infeasible for many people in the modern world to live without any kind of debt at all. Some common transactions technically involve debt, some obvious and some less obvious follow (note this may vary between countries and states):

  • Getting a mortgage
    • This is a fairly obvious example of a time some people consider debt justified, to buy a primary home, which for many people is infeasible to do outright in cash
    • You can validly argue that one could instead rent until they have the money to buy a home in cash, however that brings my next point
  • Rent an apartment
    • Many, if not most landlords will run a credit check before allowing one to rent an appointment, this is in part because you could potentially damage the apartment beyond the value of the deposit and they want to know you are good to pay if so
    • They may also use this to judge your general responsibility and reputation, to find customers who they feel are low risk of problems, or defaulting on their rent, as in essence given it takes time to evict someone, they may end up in a situation where you owe them for rent, credit is then important
  • Rent a car
    • The reasons for this are basically the same as above, having a valuable asset that doesn't belong to you and risk of default, however many would not consider this to relate to credit at all
    • Some companies may refuse you all together without good credit, others will want a greatly enlarged deposit of funds
  • Post pay utility bills
    • If you want to pay your utilities at the end of the month rather than being required to prepay, or use a meter which requires buying credit in advance you are also essentially taking credit
    • Depending on the utility company they may run a credit check for this
  • Cell phone plan (also applies to landlines)
    • If you use a contract cell phone as opposed to a PAYG one, you will likely need a credit check, both to check if you are likely to pay your bill and if you could pay for the phone if it were damaged or lost
    • This is a relatively avoidable situation as many prepay phone plans exist
  • Internet or TV service
    • Many ISPs and TV service providers want to check credit both to know if you will pay your bills and if they loan equipment to you if you are likely to be able to pay for it
  • Credit cards
    • While avoidable these still offer perks, particularly in better cards which will require a high credit score
    • They offer greatly improved fraud protection over cash, check or debit card, with lower customer liabilities and lesser consequences to you
    • They often offer rewards and cash back, which while not worth it if you might fall into debt and negate this benefit with fees, do give you free money if you can pay in full and on time reliably
  • Car (and other) insurance
    • While not a form of credit many insurance companies use your credit score to decide how reliable and financially stable you are
    • If you have poor credit they may refuse to insure you or offer punishingly high rates
    • This is illegal in some jurisdictions so may or may not be a problem

So in summary, yes, if you do nothing that involves any kind of debt, even subtle or indirect debt you do not need to care about your credit score at all, otherwise it may be important for activities you may wish to do (the list above is incomplete, there are many other such cases, and some of these only apply in some places).


Credit Unions have long advocated their services based on the fact that they consider your "character." Unfortunately, they are then at a loss to explain how they determine the value of your character, other than to say that you're buddies & play pool together so they'll give you a loan.

Your Credit History / Score is as accurate a representation of your character in business dealings as can be meaningfully quantified. It tracks your ability to effectively use and manage debt, and your propensity to pay it back responsibly or default on obligations. While it isn't perfect, it is certainly one of the best means currently available for determining someone's trustworthiness when it comes to financial matters.


Use credit and pay your bills on time. That's really about it.

If you do that, you don't need to think about credit score. It's really a big distraction that is dwelled on too much.

  • That's what I'm getting at.
    – GUI Junkie
    Commented Oct 24, 2010 at 11:30
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    This is very clear and obvious advice, but I would say monitor your credit to make sure your lenders are telling the truth about you to other future and potential lenders.
    – MrChrister
    Commented Oct 25, 2010 at 17:35

What you (and many of the answers) miss is that credit rating is about any situation where you will owe a company money, whether it is something you would normally regard as a loan or not.

For example, utility bills. I changed cell carriers last year--and they ran a credit check before opening an account. (There's no credit check for pre-paid service as that's pure cash and carry.)

Also, credit cards. They're more useful than debit cards even if you pay in full every month and thus pay no interest.

Also, expect a credit check before renting an apartment. In a competitive market it's unlikely you'll get a decent place without a decent credit rating. Cash won't even suffice in many places as there are limits on how much a landlord can demand when moving in--which means they can't ask for a high deposit to make up for a lack of credit.

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