Your credit score is a key indicator of the way you live your financial life. Those three little numbers, typically ranked from 300 for “Poor” to 650 for “Good” to 850 for “Excellent”, can affect your insurance premium, your rental or mortgage rate, and even your application for a job.

That’s why keeping an eye on your credit score from month to month is so important. And it’s easier than ever nowadays, thanks to smartphone apps that give you access to vital information and insights at no cost to you.

But as is often the case with a free service, there may be a hidden price lurking just below the surface. Could your instant, at-a-glance credit score really be a way to encourage you to take out more credit?

I started thinking about this recently, when my son went to collect his debit card from the bank. While he was there, the consultant asked if he had ever checked his credit score on his banking app.

She showed him where to find it, and advised him to improve his score, because one day he might want to buy a house or a car. She suggested that he set up an automatic monthly investment, which is great advice for a young person.

But then the consultant told my son he should take out a credit card in order to improve his credit score. That is not great advice, especially for a student who has no income.

Bank consultants may be incentivised to sign up customers for credit cards. She was using his credit score as a way to do that.

On one level, it makes sense that you need to take out credit in order to improve your credit score. If you’re going to borrow money, a lender would want to see your propensity to repay debt.

But more and more, credit scores are also being used to promote and sell credit, and not only by the banks. People can easily be lured to spend more than they would have on an expensive household item, such as a fridge or piece of furniture.

In one case that came to my attention, a domestic worker bought a fridge on credit, for R15 000. She could easily have bought a good-quality fridge for a fraction of that price. But because she qualified for a larger loan, she accepted the offer and paid off the fridge over three years.

She was lured by the fact that the expensive fridge was “only” costing her R750 a month, rather than the actual R27 000 she paid after interest and fees.

Had she saved up R15 000, would she have used it to buy that specific fridge? Or would she have opted to buy the R5 000 fridge and use the remaining R10 000 for other needs, such as a child’s school fees?

Cell phone contracts are another classic example of the fake economics of credit. How many people would fork out R15 000 or R20 000 for a phone upfront? Yet the high cost is hidden by a “more affordable” monthly instalment.

Offering credit to a consumer is not a form of altruism. It is not a favour or a gift. We need to remember that credit providers are in the business of selling credit, and retailers are in the business of selling the most expensive item they can.

Keeping track of your credit score is a great way to monitor your spending behaviour. And if you can use your score to strengthen your financial discipline and stability, then that will definitely be to your credit!