Dave Ramsey Said, ‘Don’t Believe the LIE That You Need a Credit Score’ and While He’s Technically Correct, There Are Other Factors
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them. Dave Ramsey, one of the more prolific voices in the personal finance world, has never been one to shy away from having a strong opinion. As someone who regularly voices a strong opinion around […] The post Dave Ramsey Said, ‘Don’t Believe the LIE That You Need a Credit Score’ and While He’s Technically Correct, There Are Other Factors appeared first on 24/7 Wall St..
Dave Ramsey, one of the more prolific voices in the personal finance world, has never been one to shy away from having a strong opinion. As someone who regularly voices a strong opinion around credit cards, it’s interesting to hear Dave’s views and then balance them against real-world needs.
Key Points
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Dave Ramsey is one of the world’s most prolific personal finance voices today.
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His claim that you don’t need a credit score to live your way is mostly valid, with caveats.
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Dave’s bigger concern is that having a credit card leads most people into debt.
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For this reason, we can dive into one of Dave’s most famous talking points around the “lie” that you need a credit score. While there is no question that credit cards are a surefire way to trap yourself with debt, Dave’s position, while not incorrect, doesn’t exactly tell the whole story.
Dave Ramsey Quote
To get truly specific about Dave Ramsey’s views, follow this quote: “Don’t believe the LIE that you need a credit score.” This pretty much sums up Dave’s view on where he stands around both credit cards and credit scores. However, there is an argument to be made that Dave is less anti-credit card and more anti-debt.
As someone who consistently works with people who regularly make poor financial decisions and reach out for advice, it stands to reason that Dave is exhausted seeing people drive themselves further into debt with credit cards. Unless you have the appropriate amount of willpower with a credit card, it’s hard to disagree with Dave that running yourself into debt is entirely possible and doing so quickly.
Can You Get By Without A Credit Score?
If you try to dive deeper into Dave’s belief that you don’t need a credit score, he isn’t necessarily wrong, but this doesn’t mean you should listen to his advice lock, stock, and smoking barrel. There is an argument to be made that having credit makes it easier to get a loan as a credit score is used by financial institutions to verify how much of a risk you are or are not before getting a loan.
The reality is that Dave isn’t wrong in this YouTube video when he says that not having a credit score won’t necessarily prevent you from getting an apartment rental. Will you have a higher security deposit? Yes, there is a very strong likelihood that you will need to put more down as a security deposit to make a potential landlord feel more comfortable.
The same goes for a cellphone company, which will run your credit score to see what pricing you qualify for regarding new phone installments. Even the provider’s service can be secured without credit. You just need to pay a deposit. Given all of this, Dave isn’t necessarily wrong that you can get by without a credit score or credit report, but it makes things easier if you have one.
Why Does Dave Feel This Way?
Arguably, Dave isn’t a fan of credit cards in general, but again, he is anti-debt. In other words, if you can use a credit card responsibly and pay off your monthly balances regularly, then it’s not a terrible idea.
The reality is that cashback credit cards offer you “free” money, fraud protection, purchase protection, extended warranties, auto rental coverage, and so much more that benefits your wallet. This is contrary to debit cards, where you have very little purchase protection and even less fraud protection, and while they might make you feel better about spending, they come with more risks overall.
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Life With Credit
Piggybacking on the idea of having a credit card, there is no question that life will be easier with a credit score. Take an employer looking to hire you for a job where you manage money in some capacity. In this case, they will do a credit check to see if you have large amounts of outstanding debt, and if you come back as credit invisible, you could lose out to a more qualified candidate.
Ultimately, Dave wants to keep you out of debt and enable you to build yourself up financially in a way that forces you to rely on the money you have immediately available and not “credit.” His concern is entirely valid in that credit cards feel like money you can spend right now, but it’s the banks’ money, and you don’t want them ever calling in your debt.
The post Dave Ramsey Said, ‘Don’t Believe the LIE That You Need a Credit Score’ and While He’s Technically Correct, There Are Other Factors appeared first on 24/7 Wall St..
