Credit Score Logic

Once upon a time, in a land far, far away, Mom used to do bookkeeping and accounting.  She went to business school after graduating high school to learn how to operate a comptometer, which, back in the 40’s and 50’s, was a high tech adding machine on steroids.  Mom worked as a comptometer operator (or comptroller, which is where the current term originated) until I was born a couple of years after she got married.

She applied her skills years later when my dad owned a company and she did the books and payroll for a while until there were enough profits to hire someone.  Later, after I graduated from high school, she went back to work for a couple of years as a comptroller at an engineering firm.

I’m giving you this background not to bore you, as I’m sure it has, but as a backdrop to illustrate how, at one time, Mom was pretty financially savvy and to put into perspective how this relates to a recent conversation we had.

We were eating dinner in the living room (no big surprise there) and a special report came on the local news about how to get a better credit score.  The reporter was interviewing people, including an extremely bright 5-year-old, at a splash park.  He’d quiz folks about the best way to increase their credit score and provided them with a multiple choice answer.  The kid got 4 out of 5 right – the parents didn’t do quite as well.  The exercise finally wound down and the last question was asked, which had something to do with the best strategy for using a credit card – either maintaining a zero balance, having a moderate balance on several cards, or a big balance on one.  Mom suddenly piped in by announcing, “It would help if they’d lower the interest rate on my mortgage payment.”

Bill shrugged and wandered into the kitchen, shaking his head.  I, on the other hand, couldn’t let it go.

“What does lowering the interest on your mortgage have to do with raising your credit score,” I asked.

“Because then my mortgage payment wouldn’t be as much and I could pay more towards my credit card,” she replied.

“But you have a zero balance on your credit card and you pay it off whenever you use it.  So how would that help?”

“Because I could buy more stuff if I wanted to and maintain a moderate balance like they said was good to do if I didn’t have to pay so much for my mortgage payment.”

“But what would you buy?” I asked.  “You don’t go anywhere or do anything.  When you do want something, you just send me out to get it.  What do you think you’d need to get that you’d have to put on a credit card?”

“I don’t know.  But if I did need something I could get it and raise my credit score if I wanted.”

“Mom, you have an excellent credit score already,” I said, finally getting up from the couch with my empty dinner plate.

As I took her plate and walked toward the kitchen, she called after me, “Maybe I do, but they should still lower the interest rate on my mortgage.  They’ve made enough money off of me already!”



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