Do you need a credit score?

[bjl584]

I've been listening to Dave Ramsey lately, and as some of you know, he often says that credit scores are a scam, and you don't need one or need to worry about one. I know that a lot of the regulars on the board disagree with a lot of his advice (including me), but can someone explain to me where he arrives at this logic? I understand credit scores being linked to debt, but they are used for more than loan applications.

My auto insurance company looks at credit to determine rates. Certain employers look at potential employee's credit as one of the criteria in the hiring process. Not many people pay cash for a house. How do you buy one without credit? Has anyone ever asked Dave about this? I haven't been listening long enough to hear his responses if he's ever been called out on it.

[StormRichards]

It is nonsense like this that causes me to tune him out completely, and honestly it boggles my mind that anyone follows him.

[phantom]

I've listened to Dave Ramsey often enough to hear most of his responses. In general, he likes to point out that having no credit score is different than having a poor credit score and that most reasonable companies will recognize that. He claims that his sponsor, Churchill Mortgage, is an example of a company that will give mortgages to people with no credit scores. While Dave "doesn't yell at people" for getting a 15 year mortgage, he would prefer people avoid mortgages altogether anyway.

I believe him enough that if I had serious credit card use problems, I would consider ceasing to use credit and letting my score disappear. Having no credit score is certainly better than a bad credit score, and it's better than serious credit card debt. But, people without credit scores have fewer options that people with good credit scores. Sure, my credit card cash back isn't going to make me a millionaire. Nor will having more mortgage options and the potential for a better mortgage interest rate. But, I'll take my chances with keeping my credit cards and the healthy credit score that comes with them and keep my options open.

[rennigade]

Heres dave ramseys house. You think he was able to purchase this by sticking money in paper envelopes or whatever he preaches? He's gotten rich off desperate people...the same way susan orman did. At least orman could drop some knowledge. Someone needs to feed dave his teeth.

[james.hendrickson]

Heres dave ramseys house. You think he was able to purchase this by sticking money in paper envelopes or whatever he preaches? He's gotten rich off desperate people...the same way susan orman did. At least orman could drop some knowledge. Someone needs to feed dave his teeth.

Rennigade, bro, why are you so mad at Ramsey? He had a lot of debt problems he was able to overcome.

Plus, he's right, you don't need a credit score per say, instead you do need good credit.

[disneysteve]

people without credit scores have fewer options that people with good credit scores.

I think is really the bottom line. No, you don't need a credit score, but if you don't have one, you will run into a lot more roadblocks.

There is one auto insurance company that advertises that they look at your driving history, not your credit history.

There are lenders that will do manual underwriting the old-fashioned way, but most probably won't, so if you are looking for a mortgage or auto loan, you're going to have to search around more.

I don't know how the employers deal with it. Certain jobs, especially in finance, do look at your credit. I don't know what they do with people with no credit scores.

[phantom]

Heres dave ramseys house. You think he was able to purchase this by sticking money in paper envelopes or whatever he preaches? He's gotten rich off desperate people...the same way susan orman did. At least orman could drop some knowledge. Someone needs to feed dave his teeth.

I've listened to Dave Ramsey a lot, and I've never once heard him tell people to save for large purchases like a house in paper envelopes. He has nothing against banks, savings accounts, debit cards, or writing large checks. The fact that his followers aren't going to reach his level of wealth just by following his financial advice without starting large successful businesses of their own neither invalidates his advice nor makes him a bad person.

I've heard a lot of solid criticism of the principals on which Dave Ramsey's advice. I think it's perfectly fair to question things like how big an impact not having a credit score really has on one's life and to question how bad it is to believe mutual funds can consistently return 12% and be wrong. But, I don't think it's fair to criticize him for making a ton of money while giving people advise that he believes will improve their lives.

[Mjenn]

As someone who left the US, but plans to return back, keeping some kind of credit score on record has been important. I mean when I left they checked it if you wanted to rent an apartment, get a mortgage, get a telephone, etc. Is this possible without a credit score?

[Like2Plan]

I'm kind of confused about the "no credit score" thing. All the info for a credit report is collected passively, right? I mean you can fail to pay your utilities, or medical bill, or library fine and get reported to the credit bureau--which would lower the score.
What would happen there--I've never heard of a negative value for a credit score.

[Outdoorsygal]

my son tried to get pre-qualified for a loan last night.

Now the agent emailed me today telling me our 25 yr old son has no credit

So in order to get this loan through, he needs to obtain credit.

He has a very good job he's held since College. He makes $21 per hr . No wife or kids, or debts. He's been paying rent for almost 1 yr.

The agent suggested we add our son onto the one CC card we have which is not paid off. Except we have the $$ to pay it off and planned on it.

Somehow he gains some credit though we are paying it off

We'll probably try to get him pre-qualified somewhere else.

[disneysteve]

my son tried to get pre-qualified for a loan last night.

Now the agent emailed me today telling me our 25 yr old son has no credit

So in order to get this loan through, he needs to obtain credit.

He has a very good job he's held since College. He makes $21 per hr . No wife or kids, or debts. He's been paying rent for almost 1 yr.

And this is exactly why we had our daughter get a credit card as soon as she turned 18. She's now 21 and has a 3+ year credit history and an 802 credit score.

[Fishindude77]

Credit cards can be one of the most dangerous and damaging things for young people just getting started. Sadly, most banks will recommend to young folks that they should get a credit card to start building a credit history and credit score.

Seems to me, if you have solid history of paying your rent, utilities, and other bills on time every month that should be good enough, but the credit scoring systems don't track all of these, they track credit card use.

[rennigade]

And this is exactly why we had our daughter get a credit card as soon as she turned 18. She's now 21 and has a 3+ year credit history and an 802 credit score.

This is a prime example why credit scores are hilarious. Your daughter has a higher credit score than I do. Not picking on your daughter but according to her number shes in better financial shape than me. Makes no sense.

[disneysteve]

This is a prime example why credit scores are hilarious. Your daughter has a higher credit score than I do. Not picking on your daughter but according to her number shes in better financial shape than me. Makes no sense.

She charges a modest amount each month, usually less than 10% of her credit line (which has been increased twice since she got the card).
She pays her bill in full every month.
She also has a student loan which is still in deferment but despite that she is paying $400/month on it to limit the interest that will accrue.
She has over 10K in the bank and has a Roth that she started when she was 17.

I'd say she's in better financial shape than half of America.

[rennigade]

I'd say she's in better financial shape than half of America.

Probably in better shape than more than 90% of america. I was comparing her finances to mine. According to the score shes in better financial shape than me...which isnt true.