Occasionally, as a personal finance enthusiast, I'll read a blog post or two that make me realize that blogs are really just a digital form of water-cooler talk. I read one the other day about how gosh-darn important FICO scores are to every aspect of your life.

I hate FICO scores.

Let me rephrase that.

I hate posts about FICO scores.

That's a tad more accurate. But why? I'm glad you asked. My issue is not due to my own negative experience with FICO scores. Not because of the inappropriate ways they are abused by various industries. No. My issue is that 99% of the information you'll find about FICO scores falls into one of 3 buckets:

1. Lies
2. Myths
3. Half-truths

What's the difference? Lies are when you know the truth and say otherwise. Myths are when you don't know the truth, but for some reason you're still talking. Half-truths are when you fall jut short of lying by giving enough information to still be misleading. Without judging my fellow bloggers, writers and commenters, let's look at the other side of some of this mis-information floating around.

1. Your FICO score can affect your ability to get a job. Absolutely dead wrong. This is a sure sign that whoever you're talking to doesn't know the difference between a credit score and a credit report. Some employers will request to check your credit report - a detailed list of your financial reputation mostly focused on debt repayment and timeliness with bills. This is typically done when the job entails some sort of financial responsibility, which gives them every right to want to know how you handle your own finances. Now maybe there is some niche industry that can somehow gain value from assessing candidates by reviewing credit scores. I don't know who it would be. If an employer wants to review your credit score as opposed to a credit report, then turn and walk out the door - they are idiots.
2. Your FICO score affects your ability to buy a house. Wrong again, though it may limit who you can work with. Before the days of automated underwriting, lenders used to do this magical thing now known as manual underwriting. Some lenders will not offer this service for home loans as they are far too lazy to go through the process. If you have a low score or no score at all, then according to FHA guidelines, you can override the automated system by proving that you have payed your landlord and other bills on-time or early over the past 12 months - 24 months is even better. They will also look at things like your employment, income, and assets. Three things not necessarily considered in automated underwriting. BTW - it was that fun-loving Freddie Mac and Fannie Mae that championed auto-underwriting. What does that tell you?
3. Your FICO score affects your ability to rent an apartment. Yes and no. There are many apartment communities that do not allow the management staff to use their brains. They are reduced to submitting a leasee's information for a credit check and not even getting back the score, but rather letter grade based on the score. (You're going to start to notice a trend here, but these sorts of things should tell you a lot about who you are dealing with.) Often times, these are the apartment communities that look more like a resort than a home. There are no shortage of landlords out there who are more interested in the person they are renting to than a three digit number.
4. Your FICO score affects your insurance. At some point in the 1990's, insurance companies conducted studies that associated FICO scores with the likelihood of filing a claim. This would fall under the heading of 'Non-Traditional FICO score uses'. In fact, Consumer Reports has found that the insurance industry has "no standards, little disclosure" when it comes to insurance scoring. Consumers Union has been urging legislators to ban it's use for years, and you should do the same.
   
5. Your FICO score affects your ability to get utilities. Ummm.... yeah. A bad FICO score could mean you have a poor history of paying bills on time. Thus, your local water utility may require a higher deposit, but you can still get service. Cable and cell phone providers may turn you down altogether. But then again, you don't need cable or cell phone and if for one reason you think you do, then maybe that's a good motivator for you to clean up your act.
6. Your FICO score affects your ability to open a bank account. We're almost crossing the line into fear-mongering here. It has been reported that Citibank runs in-depth credit checks before granting a request for a checking account. Funny - they are strict about checking accounts that contain your money, but require little more than a pulse to issue a credit card (and even that may be optional)?! So what is your first hint that you shouldn't be doing business with Citi? Or for that matter, any of the other mega banks?
7. Your FICO score can affect your personal relationships. I'm no dating expert, but I've never heard of anyone requesting a credit check before a date. Facebook friend requests? Nope. LinkedIn contacts? Nope. Now don't get me wrong, if you are in a serious relationship and considering marriage, money and finances are a subject that you need to discuss and be in agreement on. Even still, your current financial behavior should be more important than a score. And if you start to sense that money is more important than the mate, then it is definitely time to move on.

So did you see the trend? Those that place a high value on a credit score are not using their brains. They are not people that you want to do business with. You don't want to live in their apartments, work for their company, have money in their bank, and you don't want to date them. Many people fail to realize that the way of the FICO is in fact not the only way. In several areas, it is the default way, and many times if there is a semi-intelligent manager around, you can be considered as a person - rather than a number. Remember - your FICO score does not consider:

• your income
• your assets
• your investments

And if you still have questions, see our post on the difference between credit scores and credit reports.

Take charge of your life. Your FICO score only determines your life if you let it.