Financial Score and not "CREDIT" Score

Guys!!! I am finally back with one more thought of mine and seeing this economy I just cant stop myself but to write something.

Now a days economy is going down day by day so does the credit scores of people too. What is credit score? Do you know what it is and what does it measure or see before assigning you a score?

Well to me its nothing but a tool from-the, by-the and for-the big financial companies to play with and nothing really to teach a person how to manage. To some extent answer is yes, you are doing well if you have a wonderful credit-score, but have you ever sent he breakdown of how credit score is made of? Following are elements:

• 35 percent is based on your payment history
• 30 percent is based on outstanding debt
• 15 percent is based on the length of time you've had credit
• 10 percent is based on new credit
• 10 percent is based on the types of credit you currently have
  

As I have made you guru in the credit score modeling :-), now just understand and see by yourself what does it mean in broader terms and for what respect.
All it has to do is with your credit... that in my layman's term is debt on you. Like how much outstanding debt you have, how much is more allowed for you to take and type of debt on you. Plus the payment you make against the debt's you have. Which is all fine and good.

But does it anywhere says how good are you managing your OWN risk or securing your own future? for example as in troubled times like now how good are you? Making payments on time and having good debt like for house or car is good, but does it tell you how much you saved last month which will cover your risk in any unforeseen risk or bad time?

To me the credit score is a good view but not a complete view. A person should know the limits to which he should take the debt and always maintain a financial score in his mind that how much he saves, pays in debt and invest in other stuff. This will make him/her realize about whats in hand at the end of month and what they can afford or not. Because in bad times your credit score will go away so do your credit cards, but all that remains is the hard cash that you saved from time to time.

Like the payments you are making for against the debts help big-companies to make money and then allow to give you more debt to enjoy and afford more n more luxury. But again a person should not loose ground and live near to reality. So now you have tons of luxury equipments and you are paying all well. But as bad times come all of these go away as they are owned by the company who gave you the debt and you are left with nothing and the luxury you once enjoyed is gone. All the payments that a person once made for like 2-4-7 years against the debt has gone in drain. It has no value now and wont help you now at this instance.

So the basic thing that I want to say is that a person should only stretch his legs till he can cover them. Try to afford and maintain things that are realistically in your reach. Well i know its a long post, but I cant think I can put my point forward in less. :-)