Check your credit score: The Most-Ignored Big Win
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There are about 10 Big Wins that, if you get right, you’ll almost never have to worry about spending money on lattes or ordering a large Coke.
Let other people worry about turning the light off in their oven (yes, this is an actual piece of advice given by a personal-finance blogger.)
If you get the Big Wins right, you can buy as many lattes as you want.
In fact, I wrote an entire manifesto about Big Wins:
IWT students don’t worry about saving $2 or $3 on lattes, knowing that in the grand scheme of things, money is largely meaningless — plus, as cognitive misers, we have limited cognition and attention, so each additional thing we try to focus on means an overall reduced amount of willpower and attention.
If you had to use your limited willpower to cut back on $2 a day of something you love, versus learning how to negotiate a $10,000 salary increase, which would you rather do?
Minutiae-focused people try to focus on everything, rarely prioritizing. They obsess over their monthly spending as much as turning the oven light off, never understanding the futility of trying to trick human nature.
They use phrases like “I just need to…” and “Yeah, I really should…” and “If I just try harder this month, I should be able to…”
Those Big Wins include:
- Negotiating your salary
- Starting to invest early
- Earning money on the side
And a few others.
Today, I want to highlight one of the Big Wins that usually gets ignored. It’s sexy to talk about negotiation scripts or master-level interviewing strategies…but nobody wants to talk about this one.
Improving your credit score is a Big Win.
Boring, yes. But also potentially worth over $100,000 to you:
Consider 2 people…
- One has great credit
- The other has poor credit
In their 30s, they decide to buy houses of similar prices.
How much do you think they pay?
Simply by virtue of having different credit scores, the person with poor credit will pay over $68,000 more than the person with excellent credit.
Source: MyFico.com. Data calculated in October 2011.
Step 1 of improving your credit score is checking what it is. That way, if it’s already GREAT, you can skip optimizing it and get on to other parts of your life. But if it sucks, you can spend a few minutes setting up systems to automatically improve it. (I show you how below.)
By the way, it’s funny — improving our credit is something we “know” we should do, but we constantly look for new, shiny things to do. Just like the overweight person who constantly looks for the new fad diet, we already know what we need to do…yet we prefer to dream about something new instead of doing the simple work of executing on what works.
I refuse to do that for you. I love taking whiny shiny-strategy-seeking weirdos and kicking them off my site. Oh, you want to know what to do with your money…and you haven’t even opened the right account? Oh, you want to start trading derivatives but you haven’t even paid off your debt? Please GTFO.
Do you know virtually the only time we care about our credit? When we go to make a huge purchase, like a house or car. That’s when you hauntingly think back to my foreboding voice in your head, saying, “I should have listened to Ramit.” Unfortunately, I’m not your therapist so I won’t be coddling you. Chances are, I’ll be in Vegas anyway.
One of the defining characteristics about people who live a rich life is that they plan ahead. With few exceptions, you KNOW you’ll buy a car some day. You KNOW you’ll buy a house some day. And since the difference in a great score and a poor score can be worth $100,000+, taking a few minutes to check it is one of the easiest things you can do.
So, here’s something simple you can do BY TOMORROW that can dramatically improve your ability to live a rich life.
1. Check your credit score. I wanted to find an even easier way for you to check your credit score, so I partnered with Credit Karma to get you a free credit score. Note: You can always get your credit report free, once a year, at annualcreditreport.com.
Usually this costs $20, but you can find your credit score free via Credit Karma.
Here’s the link to improve your credit score (aff link). Amidst a bunch of scammy credit-score companies, I like these guys, which is why I reached out to partner with them.
2. If your credit score is good, move on! Spend time on other areas of living a rich life. If it’s not great, I wrote a massive post on How to Improve Your Credit Score, which you can use to implement 3 simple steps to semi-automatically improve your credit score.
This might seem boring, but it’s the steady, simple changes you make that can produce lasting change. And I insist on giving you the material you NEED instead of just the shiny tactics we all want. Because in the end, if you can take an hour to do this today, your future self will thank you.