New perspective of credit score
We used to think a good credit score is an irreplacable signature of finacial health. Because bad credit means it is harder to apply for loan and higher interest rate. That is true, but only a partial side.
First, different credit-scoring agency has different calulating credit score standard. What's more, a financial reporter notes that your credit score, not a measure of your overall financial health, just tells you whether you have enough capacity of borrowing money and paying it back. Indeed, the author's credit score fell by 20 or more points after she paid off one of her rental property with15- year loan. Cause she closed a line of credit and reduced heavitly the average length of her credit history which weights 15 percent in calculating credit score accoding to the standad provided by agency. Under this standard, it means that the more debt you owe, the higher credit score you own, and you will be penalized for becoming debt-free.
