How the Wealthy Use Credit

Warren Buffett, Berkshire Hathaway's chairman and CEO, is one of the richest men in the U.S. But his credit score is not high.

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Having a high net worth or being wealthy does not necessarily mean a person has an excellent credit score. Credit can cause confusion for people, even those who seem to understand the way money works the best. Not all wealthy people use credit to their best advantage. In some cases, someone who is wealthy might decide to avoid using credit as much as possible.

Pretending Credit Doesn't Exist

Borrowing money is anathema to some of the most wealthy, writes Jilian Mincer in the "Wall Street Journal." Mincer writes about millionaires who have difficulty obtaining mortgages because they have not used credit throughout their lives. reports that even billionaires like Warren Buffett have less than stellar credit scores. Since credit scores are determined only by people's credit history, not using credit typically results in a lower score, which makes it harder for a person to get credit when he needs it.

Income and Credit

One reason wealthy people might have lower than expected credit scores is because a misconception about income and credit exists. A person's income does not play a role in his credit history, nor does his net worth, according to So if a person does not need and therefore doesn't use much credit, his score will trend lower. For the best credit score, a wealthy person should consider his income and his credit as two separate entities. On the other hand, if a person has a lot of debt, such as a large balance on a credit card, plus a large mortgage, that will not be balanced out on a credit report by a large stock portfolio to equal a high score.

Credit Cards

Credit cards can trip up the wealthy as much as they can a person with average income. Mincer writes in the "Wall Street Journal" that wealthy people often avoid using credit cards, which harms their credit more than it helps. To improve scores, she recommends using a card at least once a year and paying off the balance immediately. The reverse is also true, according to Wealthy people might use credit cards excessively, leading to high balances, even if they pay them off monthly. The amount of debt a person has at any given time when balances are reported determines 30 percent of their score, according to

Benefits of Credit

Using credit wisely is as important for the wealthy as it is for average earners. If a person pays his credit card bills in full and on time, he will not have to pay fees or interest, which increases the money he gets to keep for himself. Maxine Sweet of Experian says wealthy people who use credit use it for the benefits it provides. Using a credit card for large purchases offers more protection than paying cash, and when traveling internationally, a credit card makes it easier to pay for items, restaurants and lodging than converting cash.