Your credit score isn’t your friend. Try Money Score instead

money score
credit score
Co-Authored and Reviewed by Gagan Sandhu, MBA - The University of Chicago Booth School of Business, CEO of Xillion
Posted on . 3 min read

Credit score has become an integral part of our financial lives. Many people view it as the single most important measure of financial health. And while there’s a correlation between financial health and credit score, that’s not the whole story. You should know credit score was not created to help consumers, but to help banks make more money.

A (very) short history of credit scores

Credit scores trace back to the 1950s, when the Fair Isaac Corporation (FICO) developed the first scoring system for banks. FICO wanted to help banks assess the risk of lending money to a borrower. Lenders could then adjust loan terms based on the likelihood of getting paid back. This came from borrower data such as credit history, income, and total debt, etc.

FICO, VantageScore, and Experian have helped build credit scoring into an estimated $14.8-billion industry in 2023. Modern scoring systems take into account a wide range of data, in some cases a borrower's credit history or even their social media activity.

But there are surprising blind spots: It doesn't consider a borrower's income, retirement savings, net worth, or assets. Credit scores can change in short periods of time, even when your financial health stays around the same. Recent analysis showed that around 70% of credit scores swing by as much as 20 points in a 90-day period. If you make a big purchase on your credit card in one month, your credit score can go down substantially. Credit scores often rely on credit history. This means a person with a great salary and savings could be penalized for not having taken out debt in the past. Credit score only gives you a number. It doesn’t tell you how you can improve or provide steps for improving your true financial health.

A high credit score means you can borrow money at good terms from the bank. It should not be viewed as a measure of your financial health.

But what is a good measure of your own financial health?

The Money Score

We at Xillion developed the Money Score to help you actually measure your financial health. Think of it as a first step: if you want to get better at something, you need to know where you’re starting and where you want to go. Money Score gives you clear direction.

So how is Money Score different from a traditional credit score? Money Score accurately measures your:

  • Saving & spending habits.
  • Stock, real estate, and other investment performance.
  • Knowledge of economics and finance.
  • Ability to manage risk and debt, appropriate for your age.
  • Ability to make excellent financial decisions.

To put it simply, Money Score measures how well you manage your own money. The typical Xillion customer can uncover 5% - 10% of improvement in returns per year by using Money Score as a guide.

Get your Money Score for FREE today.

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