How can a billionaire like Warren Buffett have an average FICO® score?
How to beat a billionaire
Do you want to have a better FICO score than Warren Buffett? Here are three dos and don'ts that can help you beat a billionaire – or at least beat his FICO score!
- Never be late...for a bill that is. Online bill-pay, email reminders, sticky notes – do whatever it takes to make sure you're always paying your bills on time each and every month. Billionaires might not care that much about a late fee or a ding to their FICO score. But when you don't have billions at your disposal, paying all of your bills on time is essential for a good FICO score – which can help you obtain credit when you need it!
- Unless you're a billionaire, don't charge like one. Sometimes it's easy to get carried away and charge, charge, charge. But running up balances that you can't afford to pay off the very next billing cycle is a good way to hurt your FICO score – and your bottom line.
- Don't get credit that you don't need. Sure it's impressive to have Platinum credit cards, Gold credit cards, credit cards with your alma matter, and a card from each of your favorite shopping spots. But do you really need all of these types of credit accounts? Probably not. While a billionaire might enjoy showing off with a card for every occasion, the rest of us could benefit from a little restraint and only open new credit accounts when necessary.
Fortune Magazine reported that Warren Buffett has a FICO score of 718 (2008, March 31, The Oracle's Credit Crisis). How can that be? Isn't Warren Buffett one of the wealthiest men on the planet?
Whether you're rich or earning minimum wage, your FICO score always tells lenders the same thing: based on your past credit actions, how likely are you to become seriously late in repaying your creditors during the next couple of years? Factors like your income or net worth aren't factored into the FICO score – only your history of paying back your debts as documented in your credit report. That's a big reason the FICO score is said to have helped democratize U.S. consumer credit since it was introduced in 1989.
So why might a billionaire have a less-than-perfect FICO score? Reasons might include:
- Very active user of credit cards with high balances
- Late in paying bills
- Credit report error
We know that wealthy people, just like anyone else, can have their credit applications turned down by lenders for having poor FICO scores. Some wealthy people even call to complain that their FICO scores don't take their wealth into account. We direct them to myFICO.com's many resources for the same information that's available to everyone, no matter what's in their bank account. When it comes to FICO scores, actions speak louder than wealth.
