21 Reasons Dave Ramsey Sucks at Giving Credit Score Advice

Dave Ramsey credit cards

There are huge disadvantages of having no credit score. I actually know this better than most. After living over ten years in Japan, I came back to the US naively assuming that the credit history I had built over there would transfer back to the US. That wasn’t the case and I found myself having to deal with numerous situations without a credit score. From my personal experience of having to deal with all the negatives that come with having no credit score, as well as knowing a number of others who experienced a similar situation to me when they returned, I can say with conviction that Dave Ramsey gives horrible credit score advice.

For those unfamiliar, Dave Ramsey refers to a credit


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50 Responses to 21 Reasons Dave Ramsey Sucks at Giving Credit Score Advice

  1. edith says:

    You don’t understand the Dave Ramsey system. It’s simple. If you’re debt free then there’s no reason you need credit. Since you don’t need credit, there isn’t a reason that you need a credit score. How can that concept be difficult to understand?

    Dave has given me the best advice and saved me from a life of debt. You badmouthing the system shows that you know nothing about debt reduction and what is important. We all would be better off if more people followed his advice.

  2. jeffrey says:

    Did you even read the article? The problem is that credit scores are used for much more than getting loans and can cost you in a number of different ways. His “If you’re debt free then there’s no reason you need credit” argument fails to take into account the realities of financial life.

  3. Alexandria says:


    At the least, I need good credit working in the financial industry. IT would be career suicide to follow Dave Ramsey’s advice.

    One additional thing on the car purchases – we have paid cash for all of our vehicles. No business or dealership accepts a personal check for a car, without a credit check. I know it’s possible, but like you said, lots of hoops and time. We are used to red carpet treatment, in comparison. No one’s ever blinked at us writing a personal check for any large purchase.

    I think it’s important to emphasize that lenders want you to believe that you have to take on debt, and different kinds of debt, to build a solid credit score. This is complete hogwash. Heck, if I had a dollar for every friend who told me they *had to* have a car loan or student loan or whatever to build up their credit score. I have lender friends who just spread that B.S. – I think they honestly believe it. (I know from personal experience that this is hogwash).

  4. Jessica says:

    I agree completely with your article and I’ve been through Dave Ramsey’s Financial Peace courses.

    I think that to not have credit only works if you plan on not making any changes to your life in the near future and you have enough money in the bank to not worry about paying extra for car/home insurance. However, if you find yourself on the market for a new job, move to a new location, buy a car (even if you pay cash) your credit score gets looked at and people make adjustments according to what they see in that number. You can be turned down for jobs simply because when they pulled your score it was lower than what their corporation feels is required for the position. They won’t ask you why it’s too low they will just not hire you. Oh and your insurance company pulls your credit score every year and adjusts accordingly.

    I don’t think not worrying about your credit score is the best advice that someone can give you financially. You can be debt free and still be concerned with your credit score. You can use a credit card wisely to make sure that your score stays in a range that allows you the perks of being financial responsible.

  5. Aiofe says:

    That’s like saying “if you’re healthy, there’s no reason you need access to medical care.” Nobody is “badmouthing” Ramsey’s system. The author rightly points out the benefits to having a good credit score and access to credit.
    I bet even Dave Ramsey would agree that carrying a credit card is a good thing IF you pay off your balance in full each month. The remark about not needing a credit score was probably just off the cuff and I doubt Ramsey himself lives that way, for the very reasons the article points out.

  6. jeffrey says:

    You would think it might have been “off the cuff,” but the quotes come from an article on his website about credit scores: http://www.daveramsey.com/article/the-truth-about-your-credit-score

  7. Anni says:

    I’d like to weigh in on “Pay More For a Car”.

    As a former finance manager of a Ford dealership, I had never seen the price of a vehicle altered based on credit. As a matter of fact, through Ford, we have to imput the agreed upon vehicle price in order to run their credit. I’m not saying this doesn’t happen, but it didn’t happen at our dealership or with Ford Credit.
    However, there is another way you pay more for a car with no credit that you might find interesting. Some of the dealer rebates are awarded only if you finance through Ford Credit for at least 6 months. Those 6 months are interest free. So, even if you have the cash for the car, you can knock thousands off your price if you finance interest free for 6 months and then pay in full. I actually had a wealthy customer with cash who could not take advantage of that rebate program because he had no credit!

  8. jeffrey says:

    Thank you — I’m not sure how that scenario slipped my mind when writing this because I did something similar with one of the car purchases I made. I added that to the article as another example. Much appreciated.

  9. Alexandria says:

    Exactly. My experience is setting price before credit is pulled, BUT being offered incentives to finance with dealership. Which we have done – we just turn around and pay off the loan ASAP. Last time we bought a car we only had to take the dealer financing for a day to get a decent discount (used car). We paid it off immediately.

  10. Mike says:

    Excellent point about flexibility. It’s also about having choices and the ability to take advantage of special investing opportunities (such as real estate) when they come up!

  11. jay says:

    And if your name’s Dave Ramsey, guess you wouldn’t need a credit score….

  12. John says:

    Most of your issues in this article are related to getting into debt. If you follow the Dave Ramsey program you will pile away cash and invest. No need to go into debt and pay cash for everything. I know it goes against our society that encourages buying “stuff” at any cost/debt. Mortgage underwriting can be done manually which is not the norm. You would have to seek out a firm that will complete the manual underwriting process. Leasing an apartment or getting into a cell phone contract will not be a big deal if you have a pile of cash….

    One thing to remember that when you use a credit card the average person spends more than if the item was purchased with cash. You simply do not feel the pain as much when using plastic.

    The conclusion is you should live a frugal life and stay out of debt. Delaying the pleasure will provide you huge independence in the future.

  13. A great article that I enjoyed reading. Definitely some good points were made, particularly with regards to the emergency fund and the drawbacks of debit cards. Count me among those that believe maintaining good credit, and a credit score, is a necessity for most people. The idea of never needing/using credit is simply not practical for most people.

  14. Seth says:

    Jeffrey – what credentials do you have? Dave Ramsey is awesome, wealthy, and has helped a lot of other people become wealthy. What have you done? I’ve never heard of you.

  15. jeffrey says:

    Actually, less than half of them are about getting into debt. Most of them are about difficulties that arise when you don’t have a credit score.

    I would also disagree about credit cards. If you know how to use them correctly, there is no overpayment — in fact, it’s easy to make money on them. Yes, you have to have self control to do this, but in my experience, once people learn to spend less than they earn, they learn that self control. Now, there are always exceptions to this, but I feel pretty confident that I can make that as a general statement.

    I do agree with your final conclusion — I would never suggest that someone stay in debt to improve their credit score – just that a good credit score being debt free is better than none at all.

  16. jeffrey says:

    heh — well, I’ve been a personal finance writer for 15+ years, but I think the real credential I have is that I actually had to live without a credit score while making an average salary…something that Dave has never had to do. The fact is that his statement that you can’t get a good credit score while being debt free is totally wrong. Stay debt free and have a good credit score and you’re going to be better off financially.

  17. There are many benefits when you have a good credit score. There are many ways to use it without dealing with debt. I agree with this article, but I do think Dave it trying to change the culture of debt and that is why he pushes this advice. He probably has a credit card and I am sure his credit score is good. He used to be in debt, so his credit score has gone up and down.

    There are many services that will check your credit score to see what type of person you are. You rent a place and they check. They want to know that you will pay your rent. You can flash cash in their face all you want, but they still check. I just picked up a business bank account and they checked my credit to see if I would be a good customer.

  18. jim says:

    This is an interesting article and I get where you’re coming from when you’re young and still “have” to buy cars, etc on credit. But, I’ve gotta tell you that I have been there and done that – with a really bad credit score as well as (later) with an excellent credit score. Bottom line for me is – screw the credit score. Ramsey is right – stay out of debt – ALL of it (when you’re able) and never look back. Cash, baby – just as soon as you can, pay CASH for everything and don’t let the creditors b.s. you into believing you need a good credit score. It’s all b.s. Really, it is. Been there and done that – from both sides of the street. Best of luck.

  19. jeffrey says:

    I’m not sure if you read the article correctly. At no point did I ever suggest that you should go into debt to get a better credit score. The point I was making was that there are many financial advantages (and time advantages) to being debt free with a good credit score compared to not having one which is what Dave advises.

  20. Seth says:

    Grayson – You obviously don’t know Dave. He does not have any credit cards, and his credit score is zero. Make sure you know what you’re talking about before you put it in writing.

  21. Seth says:

    Dave! Dave! Dave!

  22. jeffrey says:

    Actually this is another falsehood that Dave repeats — there is no such thing as a zero credit score.

  23. Lee says:

    Great article Jeffrey. Everything you said is true and correct. I’m 49 and have had credit cards since college. I’ve always paid them in full every month, for the last few years they have been set up to auto pay from a checking acct. I put every purchase I can on a credit card. All the cards I use are reward cards, 5% on gas, 2% groceries, 1% on everything else. According to Credit Karma my total credit available is $160k, utilization less than 1%, and my score was 810 last time I looked. I get A’s in every category except total accts which is a “D”. I only have 10 accts and never had a mortgage, car loan, or student loan. My score would be higher if I had more accts and debt other than credit cards, but I am proof that you can have a good score without being in debt. I’ve never paid a cent in interest or fees to a credit card company. They pay me!

  24. Kristina says:


    As someone who watched a sister move back to the US after 20+ years in the Netherlands I want to second your article and advice.

    When they returned to the US they had a stellar European credit history but nothing set up here.

    They could not:
    Rent a place to live
    Qualify for a good mortgage rate
    Send kids to private school
    Get a credit card with a limit over $500
    Get utilities started without hefty deposits and co signers for first year
    Buy a new car when they had to borrow 5k they were short. The dealer wanted a high interest rate on that car
    Not be able to negotiate with hospital after accident when they were going to have to be reimbursed from their European insurance. Hospital saw them as cash patient because of no history and won’t discuss the European insurance.
    Hire a divorce attorney two years after moving here
    And I had to watch them receive poor service everywhere they went with a credit score so low. People didn’t believe they had no history after living there for so long. They wrote them off as deadbeats when they were gainfully employed and making great money.

    Dave has his strong suits but I think his concept of credit scores is wrong for those but the top half of one percent. And even the top 1% uses credit cards!

  25. Tracy says:

    Most of these do have to do with going into debt, even if they aren’t presented that way in the subheading. Getting a divorce? Have a credit card in case you have unexpected expenses (ie go into credit card debt). Poor customer service? If you are planning to buy something ON CREDIT, they will treat you better if you have a better credit score. Financial flexibility to help others? By what, cosigning? Another action against which Dave advises. For mortgages, Dave provides a company that is used to traditional underwriting. And I can’t even figure out to what you are referring in “Difficulties Even When Successful.” What exactly are you calling about in your example? Maybe credit card companies? And Dave has said his credit score is nonexistent (sometimes he does say zero to make a point). And something tells me that if he were to go into a restaurant and use a credit card to pay, that it would not take long for that information to make its way to the internet. And I have read there is no mortgage on record for his multimillion dollar home. And somehow he got there from being bankrupt without using credit cards.

  26. srb767s says:

    I understand what you are saying and your point. The problem is many of your examples are generic problems or specific to your situation. Time wasted getting a cell phone, I have never got a cell phone fast, I have great credit. Airline bankruptsy? I wouldn’t make financial plans based on this posibility. Losing interest on money you had to put down for deposits. This is only true if you would have taken that money and invested it. 99.9% of the popluation does not do this. If they save the money on a deposit they just spend it else where. You seem like you keep a close eye on your finances and have a good handle on it. Most people are not that diligent with there money. Dave’s plan is mint to keep the non money savy people out of trouble and on a path for sucess. What you are talking about is an entire different level of money mangement and should not be compared to what Dave is trying to help people with.

  27. jay says:

    “…Dave has his strong suits but I think his concept of credit scores is wrong for those but the top half of one percent. And even the top 1% uses credit cards!”

    -Well said!

  28. Jay says:

    I’m not Dave Ramsey and my credit score has been near non-existent for 10 years now. I have never had any of the problems mentioned in the article above. I have never had to explain why I didn’t have a credit score. I have a cell phone and utilities and have changed jobs. We don’t take out any form of loan so that is a non-issue. Lastly if someone is buying new cars they shouldn’t be giving financial advice in the first place because they don’t understand money. Read ‘The Millionaire Next Door’. Millionaires don’t drive new cars, big hat no cattle people drive new cars.

    The title of the article should be ‘Why Dave Ramsey’s credit score advice is wrong for people who disagree with Dave Ramsey’s debt free philosophy’. My wife and I enjoy traveling our no debt window stickers have been remarked on by people all over the country, often followed by a mention of how Ramsey’s advice has helped their family. I have never once heard someone say “Ramsey is ok, but Jeffrey Stain is the one that helped us.”

    So perhaps instead of trying to tear down someone that is helping hurting people, helping to mend broken families/marriages and bringing about a stronger country, perhaps you should just do your own thing. But hey, Jeffrey Stain doesn’t get as many search hits as Dave Ramsey, does it?

  29. jeffrey says:

    “Have a credit card in case you have unexpected expenses (ie go into credit card debt”

    I have never paid any interest on my credit card and have never had credit card debt.

    “Financial flexibility to help others? By what, cosigning?”

    I gave an example where I chose to finance a car even though I could pay in cash because it saved me an extra $2000 — then paid off the loan so I never was charged interest — this is an example of the flexibility good credit gives and how it can save money

    My point is that Dave is wrong when he says that you have to go into debt to have a good credit score. I’m not in debt and I have a good credit score. Having it gives me many advantages I didn’t have when I had no score.

  30. jeffrey says:

    The problem I have is that the advice on the credit score is after someone is debt free. If a person has managed to get themselves to be debt free, then I assume they have learned the skills of good money management or they wouldn’t be there. When he states that people can’t have a good credit score unless they remain in debt, he’s just plain wrong.

  31. jay says:

    It seems like all of this speaks to a larger problem with the US: a society where indebtedness is the only way to prove your financial reliability.
    Too bad having a great job, education, etc. isn’t enough anymore! ‘One of these days’ your FICO score will include job history/education/etc as having some objective, measurable value. That, or those evaluating financial reliability will wake up, expand their criteria, and refuse to keep pumping money (aka fees) into the credit rating agencies.
    Can’t help but think there’s a bit of collusion between the rating agencies and credit issuing companies (banks, credit card companies, so forth) to keep the status quo.

    If only folks like Ramsey would work towards that kind of goal. No profit in that, though.

  32. jeffrey says:

    Actually, I see nothing wrong with buying a new car if you are debt free and can afford it. I have always had the money to pay for all my cars in cash (although I did finance one to save $2000 and immediately paid off the loan so I didn’t pay any interest). That new car I bought I drive for 13 years.

    As for your other comments about Dave must be right about everything because he is Dave, that’s a false argument from authority: http://en.wikipedia.org/wiki/Argument_from_authority I agree with many of the things that Dave says, but he happens to be plain wrong that it’s impossible to have a good credit score and be debt free, and that advice actually makes you less financially adept.

  33. Robin says:

    A very good article, with lots of valid points, but I don’t really see the reason why you included Dave Ramsey’s name in it at all. It could just have easily been called 21 Reasons Why a Good Credit Score Helps You Get Ahead, without using the DR name negatively to provoke a firestorm from his supporters. Unless that was the idea…and to drive traffic to the article based on his name. I know some of his ideas are not helpful in the reality we all must live in in a credit based society, but still… The article could have well stood on its own without tearing someone else down for their bad advice. The facts spoke for themselves.

  34. Save money says:

    very good article It seems like all of this speaks to a larger problem.

  35. I believe it may the fact the Dave Ramsey reaches such a large audience and he may be trying to draw attention to the idea that wrong, incomplete, or not necessarily the best, information is being communicated to people that put a lot of stock in Dave Ramsey’s advice.

  36. jeffrey says:

    The article came about because of a friend that was telling me that she was shooting for a “zero credit score” because that is what Dave Ramsey advised. She specifically told me to read the article of his I linked in the article. That is how it came about.

  37. JayS says:

    Jeffrey, just so you know there are two different Jay’s posting; am adding “s” to mine … I think you rock!

  38. Nancy says:

    Great article! Two of these situations happened to me. When I first moved to Texas, I applied for car insurance and then had to get an apartment and electricity turned on. Since I had some credit pulls, when I went back to finalize my car insurance the price went up because my credit score went down!

    Also, I bought airline tickets on a small airline that went bankrupt…the credit card refunded my money.

  39. Gailete says:

    I think there may be some valid points to the article but for many it depends on the circumstances. Where I cringe is when reading the Saving Advice forum and see people more concerned with preserving their credit score than cleaning up their debt which is going to make their credit score hit bottom most likely anyhow. That is where the problem comes in, with people more concerned about their credit score than anything else to do with their finances. A good credit score will eventually happen for those that handle their finances wisely (and obviously people in foreign countries thinking about coming back to the US need to plan for the credit score problem ahead of time). But to handle all your finances in such a way as to increase your credit score seems foolish as it may make you spend more money, take out more loans, etc. than if you had saved and bought the item straight out or charged it and paid it off within 3 weeks. But people who don’t want to pay off their debt in full since it will ‘harm’ their credit score are nuts.

  40. Christy says:

    I agree, however…while the author points out valid reasons why you need a credit score for reasons OTHER than loans (that are good, true arguments), he also didn’t do his full homework on Dave’s system either as the last 4 of 5 points are about how it makes it more difficult to GET loans. Not having a credit score on Dave’s plan goes hand-in-hand with never ever applying for loans. His other 18 to 19 points are good arguments.

  41. Sue says:

    Suze Orman has a more common sense approach to credit scores than Ramsey. His system works for a lot of people, but there’s no reason you can’t have good credit score, cards you don’t use or use infrequently without carrying balances, and financial backing that a credit score has.

  42. The author misses the mark just like many so called financial experts or bloggers. This is not doubt a misrepresentation just like the criticism Ramsey took for getting 12% on your investments. So here is what it comes down to: if you have decided to adopt a debt free lifestyle, then you don’t need a credit score and that is the Ramsey’s point. Now if you want to get a dumb car loan, get a private loan, or get access to credit, than yes, you need a good credit score.

  43. jeffrey says:

    Actually you are wrong here — you still do need a credit score, but not necessarily to borrow money. You need it because it affects many areas other than borrowing money. And the main fact is that you don’t need to go into debt to have a good credit score as Dave claims. That is exactly what the point of my article was.

  44. Jax says:

    Dave doesn’t need credit cuz he can afford to pay everything in cash and doesn’t have to worry about having a credit score.

  45. Scott says:

    This article is awful… NOTHING listed here (except for items you needed for getting into MORE debt) has been an issue for me. I don’t agree with everything Dave has to say, nor have I ever used his ELP’s, but being DEBT FREE is one thing that has changed my family’s life forever. This article should be filed securely in “don’t take financial advice from poor people” file. Good Grief…

  46. jeffrey says:

    If you read the article, you would know that I’m debt free. Nothing I listed makes you get into more debt. I’m not sure you even read the article ;)

  47. Scott says:

    I’m Sorry; here is the summary as I read it:

    57% of your points were directly related to using a debt vehicle in one way or another.

    Lack of Financial Flexibility(in lue of an emergency fund use DEBT)
    Increase Large Transaction Risks (in lue of an emergency fund use DEBT)
    Emergency Cash (you mean using emergency DEBT)
    Debit Cards Have Drawbacks (in lue of an emergency fund use DEBT)
    The Possibility of Divorce (in lue of an emergency fund use DEBT)
    Difficulty Getting Loan Approval (LOAN = DEBT)
    A More Expensive Mortgage (MORTGAGE = DEBT)
    Pay More for a Car (If you pay cash and don’t let them pull your credit they would never know)
    A More Expensive Car Loan (LOAN = DEBT)
    Difficulty Getting a Credit Card (CREDIT CARD = DEBT)
    Difficulty Getting School Loans (LOAN = DEBT)
    Difficulty Getting Business Loans (LOAN = DEBT)

    The rest may be an inconvenience but if you have a poor credit score they will be a major issue, if you are a ghost you will not have an issue. By the way I started with an 820+ credit score so I know what it was like to have stellar credit.

    If you are approaching this from the point of “The benefits of a life with excellent credit” I guess you make minimally valid points. But your title “21 Reasons Dave Ramsey Sucks at Giving Credit Score Advice” you are way of base, and I stand by my comment that this was awful. But nice use of someones name to get me to read your article! :)

  48. jeffrey says:

    Sigh — OK, lets start with an easy one. You do realize that if you pay off your credit card in full each month, there is no debt, right?

  49. Jimmy says:

    Jeff, you raise some excellent points with this article. As someone who has benefited from Dave’s class, I would say that, in general, his advice on utilization of credit cards is sound. Most people initially plan to pay their cards off every month, but are eventually forced into debt by financial circumstances or credit financing enticements (6 months, same as cash!). As Dave says, it’s all about discipline, and many people lack the discipline to use credit cards properly. When it comes to the FICO score, Dave can afford to dismiss its importance because he has enough cash “to purchase the whole apartment complex,” as he says in one lesson. The rest of us, who pay rent or have mortgages, require a good credit score. In short, for many of the reasons you state, it’s important to have a good credit score, but continually improving the FICO score is not something we should obsess over for its own sake.

  50. Tony says:

    Great article Jeffrey. I agree with a lot of what Dave has to say and I think he’s a little out there on some things.
    In Dave’s defense, for many people who have the “debt” mindset, having credit is a bad thing. If I’m so irresponsible that any credit card I get I max it out, then yes I would absolutely be better off with no credit card.
    However, people who are financially responsible can use credit cards to their advantage. If you pay your cash rewards card off every month, then you can make money by using your credit.

    I’m a disabled veteran and I purchase my home using the VA where I get exceptional rates and they waive all origination fees due to my disability. Mandatory requirement of the VA loan is a 640 credit score. If I didn’t have a credit score, I could not qualify. I would have to be manually underwritten through a local bank and pay higher rates without the VA.

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