Does A Good Credit Score Really Matter Anymore?

Does a high credit score matter anymore? Most don't careA couple mortgage refinances ago, I almost screwed myself because I had an $8 judgment against me from my local utility company that crushed my credit score by ~100 points. I thought I had an excellent credit score of 780, and I did, when I first started my 100 day refinance hell. But when my refinance bank pulled my credit report again around the 90th day, my TransUnion score plummeted to 680.

My mortgage refinance was delayed by another 10 days as my bank investigated the situation. Thankfully, everything turned out fine in the end. Since that time, I decided to regularly check my credit score once a year like I check my latest insurance coverage and health coverage. It's good practice given it's estimated about 5% of credit reports have errors as well.

Given I finally got rejected from my latest mortgage refinance attempt by Chase, I've begun to question whether a credit score has any meaning anymore. You see, I never missed a mortgage payment on this particular mortgage, and my latest credit score showed a 787. Anything above a 740 is considered excellent, and good enough for the best rate by major lenders.


From A Bank's Point Of View

After refinancing multiple properties multiple times and talking to various mortgage officers since 2003, once you have over a 740 credit score, it doesn't matter how much higher your credit score is. You will always be offered the best borrowing terms.

The only way to get even better terms (like a point credit when refinancing) is to have multiple accounts with an amount that qualifies you for top tier status. For example, Citibank designates clients with over $150,000 in investable assets as Citigold. Once you have over $500,000 in investable assets, you become Citigold Select. Benefits include free checking, a reduction in fees, a designated private banker, concierge service, and free tickets to concerts, sporting events, and dinners.

Unfortunately, big banks are so over-regulated that only the best creditors are getting loans now. Roughly 35% of mortgage applicants are getting rejected, so more and more people are just deciding to forego a mortgage altogether by just paying cash. If banks lent, then credit scores would matter more!

From A Landlord's Point Of View

As a landlord for the past 10 years, a credit score with a clean report is only one of several things I look for in a tenant. Here are all the things I look for:

* A record of consistent employment

* No felonies, no sex offenders

* Good references from previous landlords and roommates

* A resume

* A balance sheet that can cover at least six months worth of rent in case of lost employment

* A pleasant personality that recognizes the importance of caring for the property

* A 720+ credit score

* A clean credit report with no outstanding judgments

Even after evaluating a candidate based on these eight basic variables, selecting someone is still a leap of faith. My very first tenants had no credit score because they came from France. But, one of the tenants owned a rental property in London, so that went a long way in allowing me to trust they understood the viewpoint of the landlord.

There was a super nitpicky doctor a couple years out of residency who made $300,000. The only problem was his credit score was around 680. If he was a normal person who appreciated my apartment, didn't complain about the size of the kitchen, and other stuff, I would have welcomed him as a tenant. But because he seemed like a PITA from the very beginning and had a mediocre credit score for someone with such a high income, I passed.

All I want is for my tenants to take care of the property, pay the rent on time, not to sneak in new roommates who aren't on the lease, and not to disturb the neighbors. Such things aren't credit score dependent. But, if I've got a lot of demand, then I might as well narrow down the selection to those with over 720.

Related: Strategies For Securing An Apartment In A Hot Rental Market

From A Car Dealership's Point Of View

Back in September, 2014 I decided to lease a 2015 Honda Fit for $235 a month over three years. At the end of three years, the residual value is estimated to be about ~$12,600. My plan is to just buy the car in full unless I'm making gobs of money and some incredible model comes out in 2017-2018.

The Honda dealer didn't care whether I had a 740+ or a <700. At $19,025 pre-tax, the Honda Fit is at such a low price point, they are used to plenty of people with mediocre credit scores buying such a car. The same goes for the Honda Civic. Most people making the median household income of $52,000 a year should be able to swing a $235 a month car payment, even though I advise people to make 4X the amount if they want to roll in a Honda Fit.

What was more important to the Honda dealer was a buyer's down payment, income, and car payment history. My down payment was the $1,000 trade-in value of Moose, a 2000 Land Rover Discovery II with too many problems to list. For those with worse credit scores, a higher down payment solves a lot of problems. The dealership mentioned people usually come in with a $1,000 – $3,000 down payment to lease and a $2,000 – $5,000 down payment to buy.

Obviously, the Range Rover dealer is going to have stricter requirements if you're trying to majority-finance a $100,000 Range Rover. They mentioned about 50% of the buyers pay cash, while 35% lease, and 15% finance. Most lessees put SUVs on their business for a tax deduction. The cash buyers are usually millionaires, and only those who can't comfortably afford $100,000 vehicles end up financing.

From A School's Point Of View

Yale University's endowment is currently around $25 billion dollars. Whether you pay them back or not is not going to break their budget. Yale wants the best and brightest students to attend their university and make them proud afterward. Every single university wants the same thing.

I've never heard of a school judging a student's loan interest rate by their credit score because they usually don't have credit scores or have very mediocre credit scores due to a lack of credit history. If you borrow from the Federal Student Aid (FAFSA) department, like I did for business school, the interest rates are pretty much set by the government and the market. I was never asked what my FICO score was when borrowing.

The government understands the importance of education and is willing to subsidize student loans with lower payments. Unfortunately, you can't get rid of your student loans in bankruptcy yet. Maybe one day!

Refinance your student loans today. Check out Credible, a student loan marketplace that has qualified lenders competing for your business. Credible provides real rates for you to compare so you can lower your interest rate and save. Getting a quote is easy and free. Take advantage of our low interest rate environment today!

From An Employer's Point Of View

There used to be a time during the financial crisis when more and more employers started checking prospective employees' credit scores through background checks. Everybody was wigged out, and people who welched on their debt were not welcome due to all the pain they inflicted on those who continued to pay their mortgages.

But nowadays, we're in a bull market. The tables have turned and employees are finding plenty of job opportunities, at least in big cities like San Francisco, New York, LA, and Chicago. Good luck trying to get a qualified software engineer, for example. Unemployment levels are back down to boom time lows (3.8% in San Francisco) and employers can no longer be as picky with their candidates.

I've worked at three different places since 2012 as a consultant, and I've never once been asked my credit score. I had to pass a thorough background check by one employer, but the other two employers didn't do a background check at all.

From A Potential Partner's Point Of View

One of the reasons why I waited so long to start P2P lending is because I just can't stand people who don't pay their debts. Be a Lanister and always pay your debts! If I'm getting into a business venture with someone, it would be great if they had great credit. But what I'm more interested in is hard work, intelligence, relationships, and personality compatibility.

The only time when I think it's important to be completely transparent about one's finances is before marriage. Given marriage is a union of two people's finances, it wouldn't be fair for a person with good credit and good finances not to know the person they are marrying has poor credit due to a bankruptcy and massive amounts of debt. The bad credit person might be marrying the good credit person for his/her money, which will probably end in tears. It's best to start any relationship with complete honesty.

Update 2017: I'm very focused on investing in real estate crowdsourcing now. Higher returns than P2P lending and lower default rates. Check out Fundrise for free. You can invest surgically all across the country for as little as $5,000 instead of coming up with a massive downpayment.


After thinking about all the various ways in which a credit score matters, I've concluded the stronger the economy, the less a credit score matters. Other variables play a much greater role in whether you're able to qualify for a loan, rent a property, get a job, or find a spouse. That said, if you haven't checked your credit score in a while, you might as well check our credit score for free to make sure there's nothing funky going on.


* Check Your Experian Credit Score Today: For only $1 you can check what your latest Experian credit score is straight from their website. It's a good idea to see what your credit score is before applying for a loan. If it's below 720, you won't get the best rate, but at least you can spend time to improve your score. Furthermore, 1 out of 4 credit reports have errors, negatively affecting one's credit score. I had a $7 late electric bill that crushed my credit score by 100 points and almost derailed my mortgage refinance. The scary thing is, I had no idea! Check your credit score today

* Manage Your Finances In One Place: One of the best way to become financially independent and protect yourself is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize your money. Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts (brokerage, multiple banks, 401K, etc) to manage my finances on an Excel spreadsheet. Now, I can just log into Personal Capital to see how all my accounts are doing, including my net worth. I can also see how much I’m spending and saving every month through their cash flow tool.

A great feature is their Portfolio Fee Analyzer, which runs your investment portfolio(s) through its software in a click of a button to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was hemorrhaging! There is no better financial tool online that has helped me more to achieve financial freedom. It only takes a minute to sign up.

Finally, they recently launched their amazing Retirement Planning Calculator that pulls in your real data and runs a Monte Carlo simulation to give you deep insights into your financial future. Personal Capital is free, and less than one minute to sign up. It's one of the most valuable tools I've found to help achieve financial freedom.

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Is your retirement on track? Check with PC's Retirement Planner

About the Author: Sam began investing his own money ever since he first opened a Charles Schwab brokerage account online in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college on Wall Street. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 35 largely due to his investments that now generate over six figures a year in passive income. Sam now spends his time playing tennis, spending time with family, and writing online to help others achieve financial freedom.

Updated for 2020 and beyond.

38 thoughts on “Does A Good Credit Score Really Matter Anymore?”

  1. Hey so my credit score is terrible and only getting worse due to student loans etc. I live in NYC and own a car but haven’t had any issues because of the low score yet (maybe 560?). So to echo what everyone else has said, it only matters if you need it – but I can still get a home loan or car loan – so I wonder how long credit scores will carry the weight they used to.

  2. Pingback: Why Debt Welchers Are Admired | Financial Samurai

  3. As others have pointed out, credit scores only seem to matter when you are young.

    I’m in my thirties. I just barely earn six figures, but I own my home and will probably never be in a situation where I can’t buy the (used) car I want for cash. I likely will never need a loan or credit and I have twenty years of work history in my profession to back me up in my career; rather than worrying about google searches and credit reports.

    Don’t get me wrong, I’m happy to have an 800+ credit score and all… it just isn’t actually relevant.

    Sidenote: Other people’s credit score is important to me. I would not enter a serious relationship with a woman without a basic background check so I could find out if she was careless with money or not (because I’m not interested in being involved with someone who is that irresponsible).

  4. Guess it might mean more to the younger people than it would to me.
    For my purposes, it doesn’t make a diddly damn. It doesn’t stop me from doing anything I want to do, or buying anything I want to buy. It’s a paper tiger.

  5. No Nonsense Landlord

    As a landlord myself, I find credit score to be a terrific indicator of tenant behaviors. The higher the score, the less domestic abuse, less extra tenants, less drama.

    1. That makes sense Mr. Landlord. If you pay your bills on time, chances are you are pretty conscientious. That type of behavior or personality trait should spill over into other areas of your life like relationships, work ethic etc.

  6. I run the background checks on new employees for my employer. We get a credit report, but not a score. We can see how much debt they carry and if they pay their bills. We pull it, but it’s really not used for employment decisions. I think the HR person read somewhere you should include the credit report in a background check and started running them.

  7. I think credit scores still matter. They are a piece of the puzzle, not the only one though. I think top tier has moved from 740 to closer to 760. I have seen a few car commercials for 0% that show 750 in the fine print.

    Having my score over 800 gets me instant approval when adding new credit cards to earn the sign-up bonuses.

  8. Great article … I believe having an excellent credit score does not have any implication, but having a bad score does indeed affect your life.

    Having a lower credit score gives the lender/employer a reason not give you the best rate/job/deal… having effectively “squeeze” more from you in terms of penalty or extra charges. On the other hand, having a great/excellent credit score, you just get the what is available now (it does not give you anything extra).

    That is my personal experience from both ends of the credit score….

    Thanks again for a great post.. keep it up !

  9. Just got my very first credit card in the mail today. My current score is 708 so gotta get that improved to at least a 720! :D

  10. I just noticed that Citibank started showing my credit score in my account. I love the increase in transparency! Based on your experience it sure does make me wonder what’s the point of credit scores. I don’t think they will go away any time soon, but they don’t mean as much as they used to.

  11. In this world where we are all equally special, I hate to say it but handling your cash is a character issue. This is why any decent job involving fiduciary duties will run a credit check on you, and why jobs with Security Clearance requirements require it, too. A good score may not indicate sterling character, but a bad one is a huge red flag. In all the years of reading/writing PF blogs on this subject, has anyone ever seen a post where somebody owns up to responsibility for the poor credit score and admits they bought stuff they couldn’t pay for or didn’t need and they foresaw the possibility of deadbeating their debts? Nah, me neither.

    A person with a bad score has the kind of problems that impact others, and then become their problems. Whether it is with a business partner, lending institution for a home or car, a landlord, a spouse, a roommate, they may not intend to do it but their poor judgment has to be paid for by others. Literally and figuratively.

    1. I agree with you on deadbeats buying stuff they don’t need and can’t afford to pay back. But for a large # of people with credit score problems, this stems from historical problems with healthcare. For example, balance billing from an out-of-network provider who swooped in on you when you went to an in-network hospital.

      Also, there needs to be a better way to handle disputes. Currently what happens is if you dispute an item on a report, say from a collection agency, Experian and the others will write to the collection agency and say “Are you sure this is right? Please reply back” and if they confirm that it’s legit, in their opinion, then the reporting agency considers the dispute resolution complete and leaves it on. I have no problem with having judgments that have been adjudicated in small claims or civil courts on a report (including those where the debtor lost by default), but I have a big problem with people just saying “he owes me money” and it’s on there.

    2. Recently I was affected by my bad credit. My credit took a turn during the last recession. I purchased a distressed house as an investment for roughly $100k. I spent another $100k fixing up the house. The original rehab estimates were much less, around $60-70k. However, as we worked on the house, we found more issues that added to the price tag. The goal was to sell for $230k before the repair cost went up, but by the time it was ready to sell the market shifted in the other direction. It was a calculated risk that paid its price. Now, a house that we spent 200k on was worth less than our purchase price. And the value continued to diminish. So, I tried to rent the house out instead.

      Managed to find a renter, but I was coming up short about $700/month that I had to pay myself (I also had my own mortgage to worry about). And this was only the beginning of my problems.

      The A/C unit was stolen, of all things. Replacement cost.
      Roof started leaking. More costs.
      Then renters moved out and I couldn’t find anyone else to move in. Now I have to pay +$1700/month plus my own mortgage.
      Folks trashed the backyard. City sited me for trash violations.
      Then the house next door flooded in the middle of winter. The overflow flooded my basement to knee-high levels. More money departing…and a sore ass from slipping on ice.
      Then, drug addicted squatters camped out inside the house. Had to send some folks to kick them out, clean out the needles, and finally board up the place.

      I tried to short-sell it. The bank wouldn’t entertain it because I was current on my payments. Then after 2 years of hemorrhaging money, I made a choice. Either continue to lose all my money, or lose my credit, all because I tried to make some money on real estate. I wiped my hands and walked away.

      A few years later, I decided to go to business school. I went to a top tier school thinking I could make up some of the money I lost in the long run if I could get into an investment bank. I did that for a short while.

      Then I got a job offer at a regional bank. I left to go on our honeymoon. When I get back, I listen to a voicemail from this regional bank that they can’t proceed with hiring me because of the foreclosure on my record. I’m getting penalized for a mistake I made 8 years ago when I bought the place. I had even turned down a bulge bracket bank to take this offer. When I asked the regional bank, they told me that it was a bank-wide policy not to hire anyone with foreclosure above $12k, which is ridiculous if you ask me. Who has a foreclosure for just $12k?

      I went back to the bank I turned down and they don’t have that kind of bank-wide policy, only for certain positions like loan origination.

      I’m not making excuses for having poor credit. I made some bad decisions, like taking a risk on real estate that just didn’t pan out. For those of you so ready to judge our foreclosures, think about how you would have handled it if put in the same situation. You might not have ever been in the situation to begin with if you are completely risk averse (and now I am definitely risk averse). But sometimes, you take a risk. That’s life. And sometimes taking a risk collects its price. Then what? Continue hemorrhaging money so you can save your credit? Unfortunately, I’m still paying for this mistake, since we couldn’t move back to my wife’s hometown. But considering how much more money I would have lost if I had kept the house, I still think letting go was the right decision.

  12. This is a great topic of discussion. For me, having a good credit score matters to get better insurance rates and things of that sort. As far as borrowing, our assets are our best weapon. We don’t borrow for personal needs but if we ever did have the need to borrow for business reasons, we have enough assets that the banks could see that we don’t really need the money. After all, banks are more willing to lend when you don’t need it.

  13. To all these institutions credit scores still matter because that’s the way our society is driven. Personally, I’m trying to get my credit score to zero. I don’t use credit cards, have no debt and won’t be taking any out in the future.

    1. I like your style Brian. Ideally we never have to use credit cards or other debt. In our real world a lot of folks have some student debt, CC debt, mortgage etc. I think real freedom is being debt free and having passive income doing the work :)

  14. Idk, I leased my most recent car, which I do use partially for business purposes. I considered buying it with cash, but once I got the sub 1% finance offer I just decided it made zero sense as they were basically paying me for the pleasure of keeping more cash on hand.

    Even if I dont like the idea of it, I still try to fall on the side of what the maths have to say. Same thing with my student loans. Im trying to refinance the variable ones and if it goes through Im done with paying extra monthly as the conservative outcome of investing it instead will have become too large. Even if the term is long its still finite, whereas invested monies can work for decades longer and even be passed to your possibly good for nothing heirs that didnt work for it.

  15. I have so much money that I never have to borrow any. So I don’t care at all about credit scores. A BWAA-HA-HA-HAAAAAAA!!!! It’s good to be me.

  16. Great article. If banks are only giving loans to their best creditors, doesn’t that mean that credit scores still matter unless you’re loaded? It would be interesting to know what the average rejection rate is for creditors with scores 740-800 vs. creditors with scores 800+. That would help me figure out if it’s really worth stressing out over optimizing my credit score.

    1. Brett, after a 740 (used to be 720 in a lot of places), there’s no use stressing about a CS. what is your score now?

      The average credit score for rejected mortgages is around 725 FYI.

      1. It’s currently in the low 700’s since my credit history is only 8 months old (I’m still a student and got my first credit card last summer-no student loans).
        I’m looking forward to improve my score as I keep paying my bills, increasing my income, and applying for larger credit limits to lower my credit utilization ratio. Hopefully that will be enough to push me over the 740 threshold!

  17. Having a great credit score is important because having a poor one can make things really tough for you. At least that’s what conventional thinking is.

    My wife and I apply for reward credit cards every few months. My score is almost 800 and her score is around 680, mainly because of a credit card snafu when she was in her early 20’s. But I routinely get the third degree from credit card companies and have to practically beg for a $5,000 limit sometimes, while she gets instant approvals with $20,000 limits. I guess they feel they have more potential to make money off of her.

    In any case, it’s generally better to have a great score than not.

    1. Wow, fascinating and almost sounds a little predatory by the credit card companies, no?

      $20,000 limit for a 680 score to your $5,000? They are definitely trying to tempt your wife.

      1. That is interesting Syed. Form my experience, the income you list might even play a bigger part in the limit than the credit score for credit cards. I have played around with the income I list (never overstating, just lowering it) and have seen that the initial credit limit varies drastically when you lower the income. When using my wife’s credit (around 715) versus mine (over 800) the credit limits are the same using similar income.

  18. An “ultra high” credit score does not help you as much as a lower end credit score hurts you. My colleague is currently attempting to refinance his horrible private student loan and his credit score is preventing him from doing so. Kind of ironic considering the people with lower credit scores are often the ones that need the help, yet the people with higher credit scores are the only ones that can receive it. Great article to look at the various viewpoints, well done.

    1. Sorry to hear about your friend. Borrowing money is always that way. Those who need it the most are often charged the highest interest rates. Yet, the lower their interest rate, the better chance of ten paying back the loan!

      Those who don’t need the money often get the best deals.

  19. Credit reports and credit scores are probably going to stay relevant for a very long time, but I think WAY too much emphasis gets put on the score over the report. People need to care about checking reports at least once a year instead of always being concerned about a 5 – 10 point increase or decrease.

    P.S. According to Experian, employers check a version of your credit report and not actually your score. But the report is where all the dirty details are anyway.

  20. Adam @

    People always ask me about how credit cards affect their credit score. These are typically corporate gig friends with perfect payment history on mortgages, cars, and credit cars. I say the same thing. Your probably rocking a 780ish score. Any temporary drop from an extra few cards isn’t going to get you anywhere near the 740ish threshold.

  21. John C @ Action Economics

    It’s amazing how big a ding a small missed payment can make. When my wife and I moved from an apartment 8 years ago we missed a $30 gas bill, which we paid a month later when we finally received our forwarded mail. 6 years after the fact there was about a 100 point difference in my credit score and my wife’s, with that late gas bill being the only different item in our credit reports.

    My employer does a credit check, and they will deny access to people with extremely bad credit (those with many items in collections). This is for working at a nuclear power plant, but they are most concerned about the items in the report and not the actual score.

    1. Fascinating insight. A nuclear power plant is kind of a big deal! They must be super thorough given they go through the report and don’t just look at the score.

      People need to check their credit report once a year or two due to these unknown charges that one can’t feel until one applies for credit.

  22. Being financially responsible, and well employed, I have a better than average credit score. At least I assume so since I’ve never been rejected for credit since college.

    While I do check my credit report periodically for mistakes, I couldn’t tell you my credit score because it doesn’t play a large role in my life.

    I find the employer practice of checking credit reports an over-reach akin to drug testing. There are times it might be appropriate, e.g. a credit advisor position, but for most jobs it’s not relevant and an invasion of privacy.

    1. Ah, drug testing! I remember doing that in 1998-1999 at my first job and in 2001. I had to pass a drug test before getting hired. Since I had only one job from 2001-2012, I never took another drug test again.

      I wonder if employers like Google etc still test? Funny how all large finance companies test, but startup land, I’ve never heard it to happen.

  23. Great post Sam [is that short for Samurai?]. You have really helped my wife & I work out many common home economic issues. She even started acupuncture fertility treatments, which I brought up with her after reading your article.

    This post made me think of another great possible topic for a future post of yours: should you lease or buy a car? The question deserves much more sophisticated analysis [doctoral dissertation in Personal Finance?!?] then we often rely on when making our car utilization decisions.

    1. I think you’re asking too much as a landlord. Are you renting ocean view apartment towers in Miami Beach? Perfect credit just means you’re good at getting into debt. I’ve never borrowed and I’ve never looked at my credit score. I buy dirt cheap cars that have given me tons of use and live in places well below my means. Why waste hundreds od thousands on mortgage and car loan interest?

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