Credit Scores Are A Scam To Keep You Poor
Credit scores often dominate financial discussions, but they’re widely misunderstood. They don’t measure your income, wealth, or financial success—just your likelihood of repaying debt. In this session, the focus was on demystifying credit scores, exposing the trap they create, and laying out the foundation for real wealth through education, sacrifice, and smart investing.
Credit Scores and Their Misconceptions
Credit scores aren’t wealth indicators—they only reflect debt behavior. Despite popular belief, canceling a credit card or carrying no debt can actually lower your score. Introduced in the mid-1990s, credit scores gained traction when mortgage giants like Fannie Mae and Freddie Mac started requiring them, a move that partially contributed to the 2008 housing crash. Five primary factors impact your score: on-time debt repayment, credit utilization, length of credit history, new credit applications, and credit mix—none of which assess your financial net worth.
The Credit Score Trap and Its Impact on Wealth
Many people chase high credit scores under the illusion it leads to financial independence. In reality, it often results in acquiring more debt to fund lifestyle purchases. While a good score can get you lower interest rates, using loans to buy cars, vacations, or gadgets doesn’t build wealth. Alarmingly, America’s average credit score is the highest it’s ever been—coinciding with record-breaking consumer debt.
Building Wealth vs. Focusing on Credit Scores
True financial freedom comes from assets—cash, investments, and recurring income. The road to wealth requires a “decade of sacrifice,” where you spend less, earn more, and invest relentlessly. Instead of financing depreciating goods, commit to paying cash and investing in appreciating or income-producing assets.
Strategic Use of Debt and Credit Cards
Debt isn’t always bad, but it should be strategic. Use it for income-generating assets like rental properties or businesses—not personal consumption. Credit cards can be helpful tools when used wisely: cashback, fraud protection, and travel perks are great—but never carry a balance or pay interest. Discipline is essential.
Financial Education and Sacrifice for Long-Term Wealth
Wealth comes from consistent action and sound knowledge. Avoid unnecessary debt, ignore the allure of luxury spending, and instead focus on building portfolios in stocks, real estate, or businesses. Stay wary of get-rich-quick schemes and always assess risk before investing.
Investing in Companies and Valuation Metrics
The session briefly touched on using valuation metrics to compare companies in the same sector—like McDonald’s, Chipotle, and Yum Brands—to determine if stocks are under- or overvalued. Smart investing starts with knowing where your money can grow most effectively.
Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.
