The other week I was in Hudson, Wis., to do some reporting on financial literacy. While talking with some managers from the WESTconsin Credit Union, one of them mentioned that customers are working hard at saving more. He added that it's noticeable how much they care about their credit scores.

That's a big change from even five years ago, and my experience echoes his observation. Yes, we're all trying to save more and people are taking their credit scores seriously.

Maybe too seriously? I have mixed feelings about the credit score trend -- though not about efforts to save more. While it's good that people are taking their debts more seriously, it's also important to remember that credit scores have limitations.

At its most basic a good credit score reflects sound borrowing habits. The score is derived from proprietary mathematical formulas, and the number assigned to you tells lenders how risky it is to loan money to you. The higher your credit score, the better the interest rate you'll get and the more eager lenders will be to do business with you. The lower your score, the higher the interest rate you'll have to pay on a loan and the harder it is to find a lender.

This is an improvement over past practices. The computation doesn't include race, ethnicity, age, salary and neighborhood. The romanticized banker knew everyone in the community, their strengths and foibles. But in many cases bankers would only lend to people like them: white, married with kids. It was tough to get a loan if you were a minority, an immigrant, a single mother, a single woman with a career or simply living on the wrong side of the tracks.

That said, it's troublesome that credit scores are moving into sectors of the economy where the information isn't useful, such as insurance and apartment rentals. It's wrong that scores are being used in hiring decisions, especially since so many people looking for work are living through tough times.

On the personal finance front, the desire for a good score seems to have driven many people to care more about their scores than sound money management. For example, people don't close unused credit card accounts because the action will ding their credit score.

Yet why keep open accounts you don't use? I can see why banks might want you to do that, but it isn't a good idea. The only real issue in closing accounts is timing. If there's a major purchase in your immediate future, such as buying a home or a car, leave your unused accounts alone. It pays to wait to close the accounts until after the deal is done. Then close them.

The effect on your credit score is limited and with good habits your score will bounce back. It also troubles me that people borrow to boost their score even when they don't need the money. Unnecessary debt is bad debt.

Like it or not, the credit score is here to stay. It's really nothing more than a snapshot of our loan repayment history and our borrowing capacity. That's it. Nothing more, and nothing less.

Chris Farrell is economics editor for "Marketplace Money." Send your questions to cfarrell@mpr.org.