Ramsey Said “A High Credit Score Does Not Equal Success”, And He’s Sort of Right, But There Are Big Benefits.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them. Dave Ramsey has captivated millions of listeners through his show and has sold many copies of his book. The financial guru has helped people get out of debt and gain control over their finances, […] The post Ramsey Said “A High Credit Score Does Not Equal Success”, And He’s Sort of Right, But There Are Big Benefits. appeared first on 24/7 Wall St..
Dave Ramsey has captivated millions of listeners through his show and has sold many copies of his book. The financial guru has helped people get out of debt and gain control over their finances, but his thoughts about FICO scores may not resonate with everyone.
Ramsey recently said, “A high credit score does not equal success.” In other words, you can have a credit score well above 700 but still have financial obstacles. While there’s some truth to what he says, you should still aim to build your credit score, and a credit card is one of the best ways to boost your FICO score over time.
Key Points
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Dave Ramsey thinks there’s a lot more to financial success than having a high credit score.
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He’s right, but a high FICO score opens up plenty of opportunities, and a credit card is one of the best ways to build credit.
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Dave Ramsey Does Not Like Any Type of Debt
It’s important to note that Ramsey doesn’t like any type of debt. There is some good debt, such as low APR debt, that allows you to invest in assets like real estate. That’s part of the reason Ramsey prefers to use cash or debit cards over credit cards.
On the surface, it makes sense. Credit cards have high interest rates and can teach people to use money that they don’t have. You can open credit cards and end up with a good credit score, but you can also end up with a high credit card balance that accrues interest every month.
You only have to make the minimum monthly payment to have a good payment history. In most cases, the minimum payment isn’t anywhere close to enough if you want to pay off your balance in full.
Some Debt Is Good
You may have heard the phrase, “It takes money to make money.” That phrase applies to good debt that can give you more opportunities. For instance, many people take out mortgages to buy properties that they otherwise wouldn’t be able to afford.
We can apply this logic to credit card debt. Ramsey doesn’t like it when debt accumulates, but credit cards can become powerful tools if you pay them off each month. Credit cards allow you to build credit, and a higher credit score makes it easier to access more financing at lower rates.
Access to more financing isn’t always good. Some people take out personal loans and auto loans that they don’t really need. If you go into debt for unnecessary expenses, it can hurt your long-term finances. However, you may have to take out a personal loan during an emergency, and most people use mortgages to buy homes.
Using a Credit Card Responsibly Has Many Perks
A credit card opens the doors to a lot of perks if you use them correctly. While a high FICO score is a natural benefit of making on-time payments and paying off your balance at the end of each month, you will also get free rewards. Most credit cards use incentives like unlimited 2% cashback on purchases to attract consumers, and it will give you extra money. Furthermore, you aren’t taxed on any of the rewards you accumulate on your credit card.
Credit cards also give you access to a bunch of perks like 24/7 roadside assistance, exclusive travel experiences, discounts on streaming platforms, and other benefits. You won’t get these types of advantages from a debit card.
A credit card can be a great resource for your finances, but it’s important to choose the right card for your needs. You can compare this list of cashback credit cards to see which one makes the most sense for your wallet.
The post Ramsey Said “A High Credit Score Does Not Equal Success”, And He’s Sort of Right, But There Are Big Benefits. appeared first on 24/7 Wall St..
