Most financial experts suggest earning the highest possible credit score. Dave Ramsey is not one of them. Ramsey has said you should not care about your credit score, and that you don’t need good credit to thrive financially. 

He believes that focusing on earning a good credit score could actually hurt you, as those who take on higher levels of debt have higher scores as they have more opportunities to develop a positive payment history. Plus, the credit scoring formula rewards you if you take out different kinds of loans, so you’re encouraged to use personal or car loans on top of credit cards. 

Is Ramsey correct? 

You don’t need a credit score to thrive — but you have to jump through a lot of extra hoops without one

Ramsey is absolutely correct that you don’t need a credit score to thrive financially. You can pay for everything outright, including buying a home without a mortgage and buying a car without a car loan and it won’t matter what your credit is.  Since many utility providers check your credit score, and insurance companies look at your credit history as well, you can also expect to pay larger deposits for utilities and potentially higher rates for homeowners insurance. 

This may be fine for you if you have a lot of money, or if you are willing to sacrifice and save up to pay for items in cash. For some people, this makes sense — especially if they have a history of issues with impulse control and can’t handle credit cards or other loans without getting into financial trouble. 

For others, though, having a credit score is important. If you expect to borrow for a home or a vehicle, your lender is going to check your credit. While Dave Ramsey said that some lenders will still give you a loan even without a solid credit history if they engage in traditional underwriting and do a deeper dive into your financial history, this is not the case with all lenders. You’ll be narrowing down your choices for who to borrow from and potentially get stuck paying a higher rate because of it. 

If you want to rent an apartment, you’ll also need a credit history — and the same is true if you want to use a credit card, which makes it easier to rent a car or book a hotel and which enables you to earn rewards. Many companies that are considering doing business with you are going to run your credit, and it is going to complicate your life a lot if you have no credit score. 

Having a credit score is not necessarily a bad thing — but you don’t want to go into debt to earn a good one

Ramsey is also absolutely correct about another thing: Going into debt just to earn good credit can be a huge mistake. When you take on a lot of debt, every purchase becomes more expensive because of interest, and it becomes much harder to live within your means in the future since you are committing future income to pay for yesterday’s purchases. 

The good news is that you don’t actually need to take on consumer debt to earn good credit. If you get a credit card, don’t use more than 30% of the credit available to you, and pay off your card in full every month, you will earn a solid credit score, can potentially earn rewards if you pick the right card, and will benefit from other protections cards offer against fraud — and, most importantly, you’ll never pay a dime of interest.  

A credit score isn’t something to fear — a lifestyle of being in debt is. Before you get a card, commit to using it responsibly. Research to find the right card that pays you cash back for spending, charge what you can afford to pay back, and set up automatic payments for the full balance due. You can avoid getting stuck in debt with this approach, while still earning a credit score that makes many aspects of your financial life easier. 

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