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 score as the “I-Love-Debt Score” and makes the statement that “the only way to have a good credit score is to go into debt, stay in debt, and continually pay your accounts perfectly — without adding too much debt or paying too much off. In other words, stay in debt for as long as you can.” This is patently false as I currently have no debt whatsoever and yet have a good credit score. Others do too.

He then advises that since you are working to become debt free, once you reach that goal you “…don’t need a credit score, anyway, since you don’t plan on using credit!” While this might sound nice, I can attest that even when you are debt free, a good credit score comes in extremely handy. I would even argue that having one is essential if you want to truly be financially savvy since it can save you a lot of money. If you care about getting the most out of your money, a credit score, whether we like it or not, is important to have.

While you may have heard some of the below arguments before regarding why a credit score can be important, my guess is that some of my arguments you may never have considered before. Below are 21 reasons that it’s important to keep a good credit score even if you’re debt free (and why Dave Ramsey sucks at giving credit score advice).

Wasted Time

This one is huge and one that I rarely see mentioned. I can’t over emphasize this point enough, and I would argue for this reason alone, you want to keep a good credit score. Not having one will mean that you will have to spend a lot more time when it comes to numerous financial situations, including any of the ones mentioned below. If you believe that your time is worth something as I do, wasted time can be a huge cost. Even when you are able to get what you want, you usually have to spend a lot more time explaining why you don’t have a credit score even though you don’t have any debt. I had to spend countless extra hours, many being extremely frustrating, sorting out my financial situation which should have been straight forward and simple all because I had no credit history.

Difficulties Even When Successful

Another problem with having no credit score is that even when you successfully get what you want, it’s much more difficult to get it than if you had a good credit score. Not having a credit score often means going through several layers of management until you can reach someone who will approve what you need. The fact is that for most entry-level employees, if anything isn’t exactly correct, they can’t approve it. That means that people who don’t have credit scores have to work much harder to get things than others that have a good credit score can get without any hassles.

Poor Customer Service

This is another aspect of not having a credit score that is often not mentioned, but the reality is that if you have no credit score, you don’t get treated nearly as well in many situations as you do when you have a good credit. When institutions look up my credit these days, they always seem to come back with a smile and an attitude that they are willing to do anything they can to help me. When I had no credit score, they always came back with concerned looks and a demeanor telling me that it was going to be difficult to help me even if they did the best that they could. The fact is, having a good score means that you will get better treatment from anyone who looks it up.

Lack of Financial Flexibility

Having a good credit score gives you a lot of financial flexibility that isn’t available for those with no credit score. When you have a good credit score, there are many financial institutions that want to work with you. That’s not the case when you have no credit score. Having a quality credit score means that you can get a much better deal when it come to virtually any financial transaction than you could get with no credit score at all. When the unexpected happens and you need to get funds for something that you had never anticipated, you simply have more flexibility in getting them than you do without a score to your name. This include the flexibility of financially helping out others if you choose to do so.

Increase Large Transaction Risks

One of the things that I immediately realized when I was still trying to get a credit card (which I was having trouble doing because I didn’t have a credit score) was the additional risk that came when making large purchases. I have always put the purchase of my airline tickets on credit cards because years ago I had a ticket on an airline that suddenly went bankrupt. Since I had made the purchase with a credit card, the credit card company refunded the amount back to me since I never received the service I had paid for. Had I not paid with a credit card in that instance, I would have simply lost the money. I had to make a number of large purchases upon arriving back in the US and although I was able to make them in other ways, I felt a bit uneasy knowing that if things went wrong, I really had no protection simply due to the lack of a credit rating.

Emergency Cash

Having lived through the Great Hanshin Earthquake (along with a number of smaller natural disasters), I know the importance of having access to emergency funds. When these disasters happen, it’s often impossible to get access to money that you have in your bank account (in the case of the Hanshin Earthquake, it was over 2 weeks before I had access to those funds). It helps to have cash in the days immediately after the disaster when many of the electronic transaction systems are down, but it also helps to have a credit card. During that time, my credit card was a lifesaver in securing a hotel room and other needs when I needed to spend thousands of dollars to get out of the city and find other lodging, but still didn’t have access to my bank accounts. Living in an area of the US where I knew a similar disaster could take place, I found that I needed to keep a lot more cash on hand in case of an emergency. I ended up losing interest on the cash I took out of the bank account plus there was the risk that it might get stolen, or in an emergency I wouldn’t be able to get to where I kept it in my house. Even with a large amount of cash on hand, I still felt my financial preparation was far from adequate had a true emergency happened. That is not the case now that I have good credit and credit cards.

Debit Cards Have Drawbacks

It’s often argued that there really is no need to have credit cards if you have a debit card, but in my experience, there are some definite drawbacks to this argument. I had a friend who had his debit card stolen and his account compromised. While he eventually got all the money that was taken out of his account back, his account ended up being frozen for a few weeks while an investigation took place. During this time, he had no access to any of his banking funds. As mentioned above, in an emergency you might need to access more funds than are in your debit card account with no way to transfer additional funds to it. It also doesn’t cover you with large transactions like an airline ticket refund if an airline goes bankrupt.

Difficulty Getting Security Clearance

One of my friends who came back after living overseas for a number of years landed a great job, but the job required security clearance. The lack of a credit score turned out to be a major stumbling block for him to get his clearance. He eventually did, but it took a lot of time and effort since his lack of one sent up a red flag, and even ended up meaning much more scrutiny in other areas of his life as well to get the clearance. Again, if you consider time and aggravation as a cost, then there is a definite one when you don’t have a score to your name.

Difficulty Getting an Apartment

I remember talking with one apartment manager when returning to the US that told me as soon as I mentioned that I didn’t have a credit score that I wouldn’t get approved for an apartment in his complex. He explained that there was high demand for the apartments so it simply wasn’t worth the risk to management even though I had a good explanation as to why I didn’t have one. While I did eventually find an apartment, the lack of a score caused some type of issue at each complex I looked at, making the entire process much more difficult than it ever should have been, and definitely much more so than if mine had been good.

The Possibility of Divorce

Nobody ever thinks they are going to get divorced when they first get married, but the truth of the matter is a high percentage of couples do. If you go into a divorce without a credit score, this can cause a number of issue both during and after. When people believe that they will never have to take out another loan when they become debt free, they are probably at a point where they never think they will get divorced either. The problem with divorce is that it can be an extremely expensive process and can quickly wipe out any savings and emergency funds that you might have had. Once divorced, financial circumstances can greatly change to where loans you thought you would once never need, might be needed to bridge gaps until you can create a new budget for your new reality. Hiring lawyers, finding a new job, getting a new place to live all become more difficult without a score in an already stressful time.

Difficulty Getting Loan Approval

If there is ever a situation when you need a loan, not having a credit score will make it many times more difficult to secure it than if you have a good credit. The thing is, even if you anticipate never needing to get another loan again, circumstances change and life could place a wrench into your best laid plans. Even if you are debt free at a moment and don’t anticipate ever needing a loan, that can quickly change if you unexpectedly lose a job and are unable to find a new one as quickly as you hoped. Life throws curve balls from time to time and if you are thrown one without a good credit to your name, recovering from it can be a lot more difficult than if you had it.

A More Expensive Mortgage

If you need to take out a mortgage, you will end up paying much more if you don’t have a credit score. The problem is that no credit score is equivalent to a bad credit score to most lending institutions. If they have no records that you can pay off your debts, they assume the worst and assume that you can’t. This means no score is the same as having a terrible score in the eyes of lending institutions. While you still may be able to secure a loan (and you may not), you will end up having to pay a larger interest rate to do it which can mean paying tens of thousands of dollars more over the lifetime of the loan.

Difficulty Securing Utility Services

When I needed to get utilities in my name after returning from Japan, I couldn’t just call and have them turned on like I expected. Several required me to pay a deposit in order to put the service in my name since I had no credit history of paying these bills in the past. It makes for an extra step in the process, it takes more time to get the service and you lose the interest that you could have earned from the money that you must give as a deposit.

Trouble Getting a Cell Phone Contract

Upon my return to the US, I was actually denied the first cell phone contract I tried to get due to no credit history. I was eventually able to secure one, but I ended up having to pay a deposit to do so much like I had to when it came to the utilities. While the deposit wasn’t a huge amount, I did lose the interest that I could have been earning on it. Far more frustrating was the extra time and headaches (and the costs associated with them) caused by not having a score that would have never come into play if I had a good one.

Possible Negative Effect on Job Opportunities

One thing that many people fail to realize is that as many as 70% of companies will check the credit history of a candidate for a job before they hire. With so many qualified people in the job market these days, it’s often the little things that end up determining who gets hired. A lack of a credit score compared with someone with the same qualifications that has a stellar one could be the difference in who gets the job. Similar small details can make the difference on promotions within certain corporations, especially for sensitive positions. If you lose a job or are passed over a promotion, that can mean thousands of dollars in lost income.

Pay More for a Car

There have been a number of surveys over the years that show that some car dealers have a tiered system on how much they mark-up a car depending on the credit score of the individual buying the car. Those who are deemed the least credit worthy, which would include those with no credit score, can be charged as much as 3.5% more for a car than those with top scores. This has nothing to do with the interest rate on a car loan, but the actual amount that is charged for the car. That means that even if you don’t need a car loan, you can potentially end up paying more for a car when you don’t have a score.

Another way that lack of a score can cost you more, as pointed out by Anni in the comments, is that you can often get dealer discounts by financing a car worth thousands of dollars, then pay off the car loan soon after. I know that this situation arises because I did it once for one of my car purchases. I had the cash to purchase the car in full, but there was a deal to save $2000 through the credit section of the car maker if I agreed to finance the car, so it made good financial sense to do so. I took the $2000 discount and the loan, but as soon as the $2000 credit came through, I paid off the entire loan. The key here is that to take advantage of these car maker financing discounts, you have to qualify for them, and if you don’t have a credit score, you’re not likely to do so.

A More Expensive Car Loan

If you do need to take out a car loan, you will end up paying thousands of dollars more in interest charges with no score than you would with a good one. Interest rates for those with good credit are usually in the low single digits, while those without will pay double-digit interest rates on the exact same loan. While you may not think you will ever need to take out a loan again, something that you never expected like a divorce or a lost job could result in you needing to get one.

More Expensive Insurance

The insurance industry is in the business of assessing risk. They look at a wide variety of things to determine the risks of the individuals and families that use their services. One of the things that they look at is your credit score. Having one that is poor makes you a higher risk than an individual who has one that is high. The problem is that having no score doesn’t allow them to determine whether you are a higher or lower risk, so they will always make the assumption that you are a higher risk when the risk is unknown. What that all means is that if you have no score, you will end up paying more for life insurance, car insurance and homeowners insurance than you would if you hade a good score.

Difficulty Getting a Credit Card

One of the things that Dave Ramsey says is that you don’t want credit cards, but this is only true if you can’t control yourself. The truth is that credit cards are only a disadvantage if you don’t pay them off fully each month. Once you are out of debt and have built an emergency fund so that there is no need to put expenses on your credit card that you can’t pay off in full each month, credit cards are actually a financially savvy tool to use. They give you insurance in many transactions you may not have otherwise, they may provide additional insurance for you with certain purchases such as airline tickets and car rentals, and they can even pay you cash back for purchases you would otherwise make. The problem is that if you ever find yourself in a situation where you need a credit card, but you don’t have a score, it can be extremely difficult to get one. Even when you do, you can expect to have a very low credit limit that will take years to grow to where it can be useful for larger purchases. I know because the only credit card I could qualify for when I returned was with a bank that I had been with for over 20 years, and they still would only give me one with a $500 limit to start.

Difficulty Getting School Loans

If you ever decide to go back to school, having no score can make it difficult to secure loans. Again, many assume that they will never need to go to school again, but further education might be the only way to secure a job if you happened to lose the one you have. If you can’t qualify for student loans from your school or federally funded loans to pay for your education, you will have to turn to private loans which have interest rates much higher and can end up costing you thousands of dollar more for the same education.

Difficulty Getting Business Loans

If at any time you decide that you would like to start a business, not having a score can hurt you financially in trying to secure a loan for the business. When banks give business loans to individuals, they want to see that they have a track record of paying out the other loans that they have taken out. With no score to your name, that record doesn’t exist and you become a greater risk to give a business loan to. With no score, you might not be able to qualify for one at all without putting up a large amount of collateral, and even if you do, you are likely to pay a higher interest rate on the loan than if you had good credit. You will definitely have a much more difficult time securing the loan which can mean many more hours (if not days) trying to get the money you need.

In the end, Dave Ramsey gives lousy credit score advice because he fails to take into account that life can get messy in ways that we never anticipate. In addition, he doesn’t take into account the costs associated with the extra time and aggravations that can come with not having a score. If it were true that you needed to always remain in debt in order to have a good credit score as he states, I might give him some slack, but the fact is that this statement is patently false, I know because I’m currently debt free with a good score. While I’m certainly not saying that all the advice that he gives is bad, the advice he gives regarding credit scores sucks.

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

  1. Susan Jones says:

    Tracy, I doubt that his house would be available to search, but it would be poor advice to put millions of dollars of cash into a home (a potentially depreciating asset depending on the market) when you could borrow that money pretty reasonably, using the cash for other investments. I know I wish I hadn’t paid cash for the homes I have purchased,but market conditions were what they were.

    And Dave HAS had credit cards because I remember him saying that he was unaware that companies were cutting back available credit to customers until it happened to him.

  2. Joshua says:

    Sorry, but this article is off base. Using a credit card as your emergency fund is not the same as having a liquid emergency fund, nor would I recommend it to anyone. I’m not sure you fully understand Dave Ramsey’s system.

  3. jeffrey says:

    Yes, I do and I know that. I said that a credit card can sometimes be used as an emergency fund when it isn’t possible to access cash like in the case of the Hanshin Earthquake. I didn’t say that a credit card was my emergency fund.

  4. sTeaLth says:

    I really couldn’t disagree more with your article. While I respect what you think as your opinion, you’re wrong. Just because our culture is debt based doesn’t make it a good system. People like Dave Ramsey have proven, by using biblically based examples, that it is a flawed system. One example he uses is that he, being a millionaire, can go try to rent an apartment and be turned down. He would be able to write a check and buy the entire complex flat out, but he can’t rent one because he doesn’t have a credit (debt) score. He hasn’t proven that he can pay back debt. Regardless of how much money he has to his name, he can’t be trusted. That is a broken system.

    Aside from that is what the Bible actually says on this issue. You may not know Jesus Christ yourself but the system is still proven time and time again in Christian’s lives all over the globe and all throughout time. No matter how much resistance they have, the truth is still the truth. It will continue to be the truth until only the truth remains. See below. :-) I hope you read all of this. Sorry it is so long.

    Proverbs 22:7
    “The rich rules over the poor, and the borrower is the slave of the lender.”

    Proverbs 11:15
    “He who is surety for a stranger will suffer, but one who hates being surety is secure.”

    Romans 13:8
    “Owe no one anything except to love one another, for he who loves another has fulfilled the law.”

  5. sTeaLth says:

    You said, “And the main fact is that you don’t need to go into debt to have a good credit score as Dave claims.” That contradicts basically all of your article. Not to mention it is totally opposite of the truth. Debt IS Credit. You can’t get or keep a good credit score without being in or getting new debt. It’s like talking about ice but ignoring water. They are literally the same thing. The link you actually referred to in a previous post on Dave’s website completely goes against this statement. I pasted below from the link you provided yourself.


    How is your FICO score determined?

    35% of your score is based on your debt history.
    30% is based on your debt level.
    15% is based on the length of time you’ve been in debt.
    10% is based on new debt.
    10% is based on type of debt.

  6. Jeffrey Strain says:

    I never said that the system wasn’t broken. I said in the current system, people need a credit score. Your example proves it.

  7. Jeffrey Strain says:

    I have never been in debt and have a good credit score. Just because you use a credit card doesn’t mean that you have to go in debt if you pay it off each month. You seem to not understand how credit cards work. There is no debt if you pay them off each month and you don’t accrue interest charges.

  8. sTeaLth says:

    The only thing my example proves is what Dave continually talks about throughout all of his classes. It takes a little more work to live debt free but it is completely possible. You are making it sound like it’s totally impossible for someone to live today without having debt. Millions do it every day. It takes disciple. Which sadly, most Americans don’t have a clue how to practice. Debt is a crutch that our culture has created and sadly it can only hold so much weight. Eventually it will give out and you will be crushed by everything you piled on top of yourself. That isn’t to say that some people manage it better than others. Overall, it completely sets you up for failure. To say you have to “work harder” to do things is a VERY poor argument when it comes to explaining why someone would need credit. Simply put: Work a job, save up to pay for things, and do some research on living arrangements (you can get a home loan or even rent an apartment with a 0 on your credit score).

    Also, to say that those Bible versus support your article is completely false. I really hope you are just talking and don’t believe that.

  9. sTeaLth says:

    Debt doesn’t necessarily mean doesn’t roll over to the next month. Debt means you are promising something you haven’t given yet. Regardless of if it is paid off by the end of the month or not. It’s debt.

    In regards to you paying off your credit card in full every month before the balance is due… that does NOT build credit. In fact it can hurt your credit. I found an article to prove this point from a few years ago. Here is a little of it:

    “Paying your credit card balance in full but using most of your credit limit every month can actually hurt your credit score. In that sense, your spending habits aren’t “fine.” You don’t get extra points for paying in full, even though it’s financially smart to do so. The score relies on information in your credit report, which doesn’t indicate that you’ve paid off the balance. What it does show are your monthly balances as reported by creditors.

    Despite your habit of paying in full, the monthly reported balance on your credit report may not be zero. The amount on your report will reflect the account balance at the time the lender supplied it to the credit bureaus. If your statement balance gets reported, then your credit report will show that you’ve used 90 percent of your available credit. The higher the reported balance is in relation to the limit, the worse the impact on your score.”

    I have been teaching this stuff for several years and I know what I am talking about. See the full article below.


  10. Jeffrey Strain says:

    “In regards to you paying off your credit card in full every month before the balance is due… that does NOT build credit.”

    That is simply not true. If it were, I would have no credit because it’s the only thing I have that could build credit after I returned back from Japan. I have a credit score. And a good one at that.

    If you read the article, it says it may hurt your credit score if you are charging 90% of the limit each month — again, a simple way to avoid this is to get a higher credit limit (it doesn’t matter because it’s being paid off in full each month) so that you aren’t so close to your limit.

    Again, this actually proves that having a credit card and paying it off in full each month does affect your credit score which contradicts your statement that it doesn’t build credit.

  11. Erik says:

    LMAO!!!!! Your an idiot but Thanks for the laugh, FYI dave works and has interviews thousands of millionaires and wealthy people who do not have any credit score and live life without issues. You like a credit score well good for you YAY!!!! But really who the hell cares what you think or what I think, your opinion just make me laugh.

  12. The problem, of course, is that Dave is talking to millionaires and I’m talking to the average person. Once you are a millionaire, you don’t need a credit score if you don’t want (although it’s still in your financial favor to do so) because you have the money to self finance…until you get there, you do for the reasons I explain above.

  13. Deandre says:

    What a refreshing post. I’m tired of all the Dave Ramsey parrots out there that can’t actually think for themselves. If you’re a multi millionaire, you might not need a credit score, but the average person does unless they want to pay more for everything.

  14. Willis says:

    I’ll start with part of a quote guys; author quotes Dave Ramsey: “In other words, stay in debt for as long as you can.”
    Author: This is patently false as I currently have no debt whatsoever and yet have a good credit score. Others do too.”

    And yet to use a credit card is to go into debt BECAUSE you are borrowing money! I rate this article 1 star for a simple but crucial logic error, you cannot borrow money and be debt free!

  15. I don’t think you understand how credit cards work. You are only in debt if you don’t have the money to pay off the credit card each month. If you pay off your credit card each month in full, as I do, you never have to pay any interest charges.

  16. Well, Seth, I have put over 500 families through FPU, taught it for Fortune 500 companies, have sat in the radio studio with Dave twice, had dinner with him, been to his Christmas party, and was asked to be the first certified FPU corporate trainer in the state of Texas. For six years I was the only ELP he endorsed South of San Antonio and Houston. I’ve been in the financial industry since 1996 and spent a decade as a stock broker managing millions of dollars for my clients. And I can tell you that it’s my professional opinion that 13 of the points don’t have anything to do with going in to debt.

    Yes if you have Dave’s cash you can afford to completely blow off your score. One client of mine had to pay $1400 more a year bc his credit score was 719 not 720. He paid almost $120 a month extra bc he missed the mark by one (1) point. At a cook out this weekend a friend said he had to call SEVEN electric companies before finding one that didn’t want to base their rates on his score. It’s called Risk Based Retail and it’s gaining momentum.

    At no point has Jeffery said to be crazy or reckless with spending or debt. He said he lives debt free. Soon your credit score is going to encompass your education level, and all other aspects of your life. And it’s going to influence 85% of the transactions you make, even if you use cash. So, if you decide to have no score, you’ll end up paying more for the things that you buy.

    I help people get debt free AND increase their scores at the same time. One client recently was able to eliminate $112,000 in debt in less than 6 months. One client, as we eliminated $18,000 in debt we boosted his score 150 points… In less than 90 days.

    And, well Seth, up until now, Jeffery had never heard of you either.

  17. jamie says:

    If you have the cash, then it makes NO SENSE to pay off your credit card balance each month. That is backwards thinking…and societies corrupted indoctrination…JUST pay with cash…no brainer.Dave Ramsey is logical and speaks the truth, and has tremendous advice who has helped millions. He teaches how we are to manage money the way scripture says. Try it sometime… It’s life changing, along with peace, freedom, and great joy. Dave teaches to build wealth,not credit(credit equates to debt, which go hand in hand.) Broke people ask, how much a month and how much down. Wealthy building people ask, how much. Go figure…Dave knows what works. He just makes sense.

  18. Jeffrey Strain says:

    You’re saying it makes no sense to save an extra 3% – 5% with each purchase, plus get extra protections while giving you a higher credit score? I’m not sure why that makes no sense..,

  19. jamie says:

    There isn’t a wealthly debt- free person out there that will say that’s how they became wealthy, by saving 3-5% from credit cards. I understand how confusing that is for some, especially when we’re conditioned to think like the majority.I used to think the same way. You can’t build wealth when debt is involved. It’s an oxymoron.

  20. Jeffrey Strain says:

    There are plenty of people who are wealthier than they would have been had they paid cash. Do you throw away coupons for products that you normally buy that save you a small percentage on the food you buy? Not using a credit card is doing the exact same thing as long as you pay it off each month. Pay cash if you don’t like saving money, but don’t say it’s financially savvy to do so.

  21. jamie says:

    I am sure there are people who will pay off a credit card balance each month, but if that’s the case, why not WAIT a month to save the cash to buy the product, then there wouldn’t be that opportunity to pay off a balance. Statistics show that consumers will spend 17% more “on average” when using a credit card verses cash. So, saving the 3-5% is just one way to keep a person using plastic. Also, wealthy people can still be frugal when it comes to using coupons.(not against using them.)Again, if a person wants to be taught how to manage money well, then hang with those who know and then pass the blessings to others. Those convinced against their will are of the same opinion still. Jeffrie, I wish you well.Proverbs 22-7 Dave Ramsey ROCKS!!

  22. Allied says:

    Thank you for a wonderful article. People who blindly follow Dave Ramsey aren’t thinking for themselves. There is no such thing as no credit score, you can have a low score, bit not 0.

    I too pay my cards in full each month. Recently moving cross country was a breeze. Used the cards, got 3% back in rewards, and paid the cards off before due. I’ve been in travel emergencies where a credit card saved the day.
    Much of what Dave teaches is good, but the idea that you should ALWAYS shun credit cards is absurd.

    And though I have no debt I’m proud of our 780 credit score! It shows employers, insurance companies, etc that I’m a good risk. I’ve taught my children how to do the same and life is good (even with me being on disability). Smart money management is all you need.

  23. jamie says:

    SMART? Smart management does NOT mean debt…DEBT IS DUMB, CASH IS KING. You can’t build wealth with debt…There IS such a thing as a “zero” credit score. Anything above that means, “I love debt score.” Dave makes millions and doesn’t have a credit score. How do you explain that? Dave doesn’t just speak to those who make millions of dollars, because I am one of them and now debt-free. He also speaks to the average person. Those who faithfully listen to him would truly know that. I am a faithful listener of Dave Ramsey but before Dave in my life, I used to have a credit score(with a fantastic credit history) and blindly thought that it was NEEDED, but now my score is zero.Thanks to God through what Dave teaches. Using cash speaks volumes. You can’t build wealth with debt.(makes no sense.)I,along with thousands of others, don’t want to be a “slave” to the lender. ***A debit card can be used for your travel emergencies. Using a credit card is what is considered blindly thinking. Wish the best.

  24. Jeffhinsac says:


    Sounds like you needed Dave’s system and I’m glad it helped you.

    But that doesn’t mean your not wrong about credit cards or paying for a car with financing in full before the interest starts..

    Most purchases made in the world you sign a contract and transfer funds, if you pay with “cash” by writing a check it takes about a week to 10 days for the person to actually have that money in hand. Up until then it can reverse (bounce) and even if you cashed it you were using a system of promises and honor.

    Credit cards extend that to 20-31 days before it’s actually debt and financing can be interest free for 6-18 months. There is no difference and unless you pay in physical cash it’s all a promise to pay.. When I worked in purchasing for a company things were done with purchase orders, payment due on delivery or 30 days after. Dave’s office does the same, it’s how the world works.

    Now I must say some can’t live in that world (you) and millionaires don’t have too, but that doesn’t mean the rest of us can’t be debt free and still use finance mechanisms.

    Good luck to you but if your true to living debt free (pay all you owe and never take a loan again) you still have credit and it can be good , there is no need to have bad credit just because u don’t use it for the credit cards or car loans, do it for your family so if u go belly up you can make payments to the hospital instead of it going strait to collections. Do it for your self so when u get fired your next job offer doesn’t skip you over based on low or no score, do it for insurance which is based on your score and has nothing to do with debt..

    Here is a shocker to most, having a credit card and burning it then never using can build credit if it’s one that doesnt require activity, or if it does put your netflix on the card then have it auto pay from your bank account .. Credit will build since that $8 is less than 10% of the card no matter how little the limit and then
    Burn it and your bank account still gets debited $8 a month..

    Better yet set up autopay and call it “netflix” instead of capital one and it will even show in your statement the same as it does today credit card free, then have your credit address changed to your sister or cousin and they can just toss it.. Without statements or a card to remind you then you can pretend it’s not there.

    I know I went overboard but I thought the comments were hilarious, I was in dept once, more than I could pay in a lifetime, I changed my ways and live dept free thanks to Dave ! Just kidding about thanks to Dave, never heard of him or mr stain until today,, lol but I’m living debt free, no balance on cards, score too low to get a premium job (recruiters have told me) but it’s going up every month,

  25. PCR says:

    I’m a bit confused on the logic of Zero Credit. I say ‘confused’ because if a person only wants to pay in cash and has the cash available for a purchase, how hard is it to charge it on a credit card and pay it off with the cash?
    So you’re going to buy a couch? You’re going to spend $250 for the couch? You know you have the ‘cash’ in your bank account. Wouldn’t you like to be rewarded for spending $250 on a couch? Then why not use the credit card to your advantage. You set the credit limit, say $500, and you get cash back on the card for every purchase. So how hard is it to charge the $250 for the couch then pay off the credit card 3 days later? Now let’s say that credit card rewards you with 5% cash back on purchases. You charge $250, pay off the $250 a few days later and at the end of the credit billing cycle, you’re getting back $12.5. Did you pay interest? No.. but they paid you to use the card.
    I’ve spent over $20K on my to reward credit cards since January. I make weekly payments on these cards because I have the cash for the purchase. Since I make the payments on the credit charged, I’ve paid ZERO interest but have received back $325 back in cash. All of this was done because I bought items with my cash. Yes, it’s one little step more to paying for the item but it’s so rewarding to see my statement read: Zero Interest paid, Zero Fees & $12.5 back in cash.
    If you know the rules to credit cards, you’re responsible and pay off what you purchase, you can be rewarded in return. Credit cards are NOT the enemy, viewing credit as cash is and treating credit as a checking/saving account is wrong. Just because you have a $5000 balance does NOT mean you have $5000 in cash.
    Make credit pay you, not you paying them in interest.
    I’ve been using my credit cards like this and my credit score is in the 800s. They haven’t punished me for using credit responsibly.

  26. jake says:

    I’ve talked to Dave before….. what a dick. Doesn’t understand that everyone isn’t a millionaire like him. He is a worthless piece of human garbage who sucks at his life. Dave just stop, please, just stop, I cannot take it anymore. Just retire and go away. Have a ALO day.

  27. Mike 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?” – jeffrey

    You were in debt for the time, you charged the item till you paid it off idiot. You are in debt stupid.

    If I pay off a 3 year, 0 interest car loan in 2 years I never was in debt?

  28. Mike says:

    “There is no debt if you pay them off each month and you don’t accrue interest charges.”

    Hogwash, you went into debt using your credit card regardless if you pay it off immediately or incurred interest.

    You meant to say “”There is no INTEREST if you pay them off each month” you still went into debt albeit for a short period.


  29. Mike says:

    Average user of a credit card spends 17% more so great for you and your 1% cash back. You still spent 16% more than a person using cash.

  30. Mike says:

    Wrong, you don’t understand debt. “a liability or obligation to pay” http://dictionary.reference.com/browse/debt

    I think you are confusing debt with interest charges.

  31. Mike says:

    Yes, since average credit card users spend 12-18% more.

  32. Mike says:

    PCR – “people spend 12-18% more when using credit cards instead of cash”

  33. Jeffrey Strain says:

    People who aren’t good with money and are prone to impulse purchases spend more. Not everyone with a credit card spends more. Just like the average person has $xxx amount of credit card debt, there are a lot of people who have no credit card debt.

  34. Jeffrey Strain says:

    Yes I do. You’re giving me a literal definition while I was giving a practical definition. If I have the money to pay off the debt but choose not to because it gives me other rewards, gain those rewards and never have to pay the interest (because it’s paid off before any interest is due) it’s not different than never having the debt (for your finances). The key is having the money to pay off the debt and not buying things you don’t currently have the money to pay it off.

  35. Jeffrey Strain says:

    Right — again, you are using a literal definition while i was giving a practical everyday explanation. Debt is bad for your finances if your have to pay interest on it and/or you don’t have enough money you pay it off immediately. Since I always have both, I use that to my advantage. In all practical purposes, although literally debt for a short period of time, since I have the money and I do pay it off in full before any interest is due, and I could pay it all in cash if I wanted, there is no practical difference (so I choose to leverage that to my advantage)

  36. Jeffrey Strain says:

    “If I pay off a 3 year, 0 interest car loan in 2 years I never was in debt?”

    Practically speaking, if you have the entire amount to pay off that loan at any time in full, then no — you are simply using the money to earn more money, not the typical definition of paying interest on money you don’t have. Yes, there is “debt” on paper, but since you have the money to pay off the entire note anytime in full, it’s not what we typically are referring to when talking about debt. The only reason you have it is because you can earn money on the extra money with the 0% loan but putting that money in a bank and earning interest.

  37. Mike says:

    LOL, I think you are just trolling now. “Practically speaking” debt is debt regardless if you have the money to pay in full.

  38. Mike says:

    LOL, now I think you might be confusing debt with net worth (assets minus debt).

    I go into a bank for a home improvement loan, they say list all your debt, income, and all your assets. I decide to use Jeffrey Strain’s practical definition of debt so don’t to list the car loan, house loan, and credit card balance since I have the money in cash to pay for it all. The banker pulls my credit score and compares, then calls me a liar and to get out. Thanks Jeffery

  39. Jeffrey Strain says:

    Now you’re just being ornery. If you had the cash on hand, you would never go for a home improvement loan (unless they would give it to you with no interest). What you fail to comprehend is there is a difference if you have cash on hand that you would use to pay off the purchase right then and there, but choose not to for the extra benefits of not doing so.

  40. Jeffrey Strain says:

    In your world, there is no difference between someone who has $2000 on their credit card and doesn’t have the cash to pay it off in full so they will have interest charges and will pay it off over a long period of time and someone who has $2000 on their credit card, but it will be paid off in full when the credit card bill comes. To me (and most people) there is a huge difference.

  41. Mike says:

    You are correct, there is a difference in the scenarios you mention but it is not debt. Both cases the person is using debt which you don’t seem to comprehend.

  42. Mike says:

    Anyways, main point is you don’t know what debt is ( literal or practical ).

  43. Jeffrey Strain says:

    I’m glad we can agree there is a difference. Now, can we agree that paying off your credit card in full each month so there are no interest charges (assuming you are good with money and don’t spend more on your credit card than you would with cash) that you aren’t hurting your finances by using a credit card?

  44. James says:

    Glad I’m not the “Average user”
    0 Credit Card Debt

  45. James says:

    Any Bill is Debt,
    Water Bill
    Gas Bill
    Electric Bill
    Cable Bill
    Tax Bill
    Restaurant bill ( Yes even if you plan on paying in Cash you are in Debt until the bill is paid, so you are in debt for 30 seconds, 3 min’s or more it’s still debt )
    and the list goes on.

    I am glad that Dave’s 7 Baby Steps work for those that follow it 100%. I on the other hand have been where Jeffrey has talked about not having a Credit Score ( this was Years before I heard of Dave Ramsey ) when trying to buy a home.
    We have our 6 months FFEF in place.
    We have our Home Paid.
    Have 20% going into Retirement
    Have our Sinking funds in place for our
    Taxes, Vacation, Car Repair, Xmas, Clothes and 12 other funds.

    Also have 12 Credit Cards that I manipulate, with only one that is with me along with my 2 debit cards. The debit cards are used 90% of the time while. The rest are nicely tucked away and maybe 2 or 3 of the other cards might see the light of day once a year if that depending on the discount offers that come in with the statements and only if we need something.

    Now 4 years ago had 0 Credit Cards and 0 dollars Line of Credit. Now I have $99,000 line of Credit between HELOC and Credit Cards. I could close all the accounts tomorrow without issues as I don’t use them like the average user, for the most part they are not used at all.

    Had heard about DR about 2 years ago from co-workers, but did not really list to the Radio show or look at the baby steps until about 18 months ago. Then Nov of 2013 purchased DR’s TMMO, spent 300 dollars talk with one of DR’s ELP’s and even he did not seem to follow Dave 100% base on our conversation. Ended up with FPU and listed to the CD’s/DVD’s over a week period a few months later. Last month I gave the FPU and TMMO to my sister and brother-in-law and they are going thru it now.

    When you really look at it, we all have Debt some more than others.

  46. Mac says:

    You advertise 21 reasons, but it seems to me many of them can be lumped together. As I read your article I counted these reasons:

    Inconvenience when a credit score is used to check your reputation. Well, I don’t know what sort of business you’re in, but I probably engage in transactions where my credit score is checked about once every five years or less. The increased inconvenience isn’t going to kill me.

    Difficulty going into debt. Dave Ramsey and millions of his followers (myself included) don’t need debt anymore BECAUSE we stopped borrowing. Jeffrey and his supporters in the comment thread seem to think you don’t need debt because you’re a millionaire. Actually, you become a millionaire because you don’t use debt. You have the cause and effect reversed.

    Credit card protections. I am more than satisfied with the protections afforded me through the Visa network on my debit card if I conduct my transactions as “credit” at the terminal instead of “debit” (entering a PIN). Maybe there are more sophisticated insurance products available from some of the debt-credit card companies, but I don’t need them.

    Insurance. My credit score will be zero soon, but isn’t yet. If my insurer hikes up my rates because of that, I’m going to be an excellent customer for a different company.

    Jobs. Didn’t you say your friend did get the needed security clearance after jumping through a few extra hoops? I think that’s worth it. (Maybe this should be lumped into inconvenience.)

    Cars. This one is tricky. The big auto manufacturers are starting to realize that the real money is in lending, not selling cars. Because of this, they favor the debt customers, and if you’re a debt-free (or interest-free) purchaser with a high credit score you may have an opportunity to game the system for a new car. Personally, I’ll stick to buying used cars. If you flash some cash while negotiating a private sale, the seller gets motivated! That may not work when you’re buying a new car these days.

    Poor customer service. This is where I’ll flash a little credential. I have a degree in psychology. This is what we call, “Confirmation bias.” You go into a transaction and believe you will be treated more poorly because of your low credit score, and you interpret the behaviors of the sales-staff to confirm your belief. Furthermore, you become defensive because you perceive this effect and that causes the sales-staff to treat you differently, which triggers a cycle of increased hostility. In other words, it’s all in your head. This one doesn’t count.

    By my count you’ve provided only five reasons, because I’m lumping the jobs thing into inconvenience and not counting your confirmation bias.

    You said you pay off your credit card every month. Good for you. I am perceived by others to be a responsible and disciplined person, but when I had a credit card I let it slip a few months here and there, and I paid a $50 fee to use the thing to pay my tuition in college once. That $50 cost me years worth of rewards! I don’t think the credit card companies offer these deals as a charitable pursuit. They make money and we lose it. When you go to Vegas the house always wins. When you play with credit cards, they usually do too. To net a profit on rewards credit cards you have to be perfect over a long time, and I’m not that perfect person, and I think it’s irresponsible to advise people to assume they can be.

    Dave Ramsey and us followers of his philosophy are applying pressure on companies that rely on credit score alone to make their decisions. When 99% of Americans have a credit score above 400, nobody has to rent to the people with credit scores of zero. If 15% of Americans have zero credit scores and a boatload of savings then we become valuable market share, and a darn good risk for someone looking to rent out an apartment.

  47. Supernova says:

    This is an interesting discussion. I personally cannot fathom navigating the world without credit cards – and I’m a millionaire with no debt. My family and I live way below our means, and I assure all the DR fans out there that using credit cards does NOT mean that I spend 12 – 18% more than I otherwise would.

    Did my use of credit cards make me a millionaire? Not hardly. But it certainly didn’t hurt.

    Let me give two examples.

    When my son was born, I opened a Upromise card that sends cash-back rewards straight to his college fund. Just this week, I went on Orbitz to purchase airline tickets/hotel rooms/attraction tickets for some planned vacations this summer. We already had the cash for these vacations in hand, BTW. But since I used my credit card, we qualified for extra rewards just for using Orbitz. As a result, $149 will be transferred to my son’s 529 account. Not much, perhaps, but now that gets to grow for the next 10 years. At a very conservative 5%, that $149 will grow to $245. So I just made $245 for choosing to use a credit card that I’ve actually already paid off. And that’s just one transaction. I usually use this card for the big stuff, just to get those extra rewards.

    After his birth, I also signed up for a basic 1.5% back card. We really don’t spend a lot every month, but charge darn near everything, including quarterly property taxes. So charging an average of $1,000 a month nets me $15 a month and I pop that right into a savings account for him. By the time he’s 16, I will have over $4,000 to put towards his car. If he doesn’t need it (because he’s already quite the entrepreneur in his own right), that can grow until he’s 25 and needs it towards his first house. By that time, it will be $9,000.

    So did I get rich using credit cards? No. But I consider them just another tool in my financial toolbox, and I love the peace of mind I’ll have when my son reaches those milestones and I don’t have to sell stock or go into our regular savings accounts.

    I like the comment above that all bills are debt. You use the city’s water for a month and you’ve gone into debt for the amount you’ve used. You pay it off, but already you’ve incurred debt for the new month.

    I understand that some people have gotten into trouble with credit cards. I was one of those when I was in my early 20’s. But if you have the discipline to save an emergency fund and operate on a cash basis, you probably have the discipline to use a credit card and take advantage of the financial rewards for doing so.

  48. Jared says:

    Actually it’s not a falsehood. I’ve been living completely debt free for the past 18 months and now have a zero credit score. Literally, than ran my credit score and it came back as a zero.

    I’m now trying to get a home loan using Churchill mortgage which Dave always raves about since they do manual underwriting. The underwriting process just for a pre-qualification letter has taken nearly a month, and that for a rate that is about 1% higher than competitive market rates. I’m now on my way to being an ex-Dave fan (at least regarding FICO scores)! I think I’ll get a credit card tomorrow and wait for my credit score to come back so I can get a competitive home loan. Paying 1% higher would cost me about $25k over the life of the loan! I think I’m more financially wise than that!

  49. Jeffrey Strain says:

    I’m not sure who you heard this from, but it can’t come back as “zero” Credit scores range from 300 to 850. What you likely have is no credit score. There is no such thing as a 0 credit score.

  50. Mike Henke says:

    Ha, Ha – “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?”

    Ha Ha Ha, that is debt for the entire time you haven’t paid it. So for 30 days you have debt then 1 day you don’t. LOL, you are funny for then saying you are debt free.

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