Ramsey’s “Credit Score Lie” Statement: Technically True, But What Else Matters?

Your credit score is a number you may not stop to think about until you’re ready to borrow money. But the higher it is, the easier it becomes to not only get a loan, but also to snag an interest rate you’re more likely to be happy with.

If you don’t have a credit score, though, it’s going to be a struggle to borrow money. But if you ask financial guru Dave Ramsey, not having a credit score is perfectly fine.

On Ramsey Solutions, it says that “living without credit cards is a great idea.” It also says, “You don’t need a credit score to get through life.”

But that line of thinking is pretty flawed.

Why you do need a credit score

If you truly never intend to borrow money, then you might technically be able to get away with not having a credit score. But if you ever want to buy a house, it’s going to be difficult to do so without a credit score, since most people don’t have hundreds of thousands of dollars sitting around to purchase a home in cash.

Plus, in some cases, you might need a credit score even if you’re not borrowing money. Renting a home is a prime example. Landlords like to see good credit so they know they’re leasing to a reliable tenant.  

Also, while you might prefer to pay for your purchases in cash instead of using a credit card, sometimes, life happens. Your roof could spring a massive leak. Your car could refuse to start.

You never know when you might need to charge an unplanned expense that can’t wait on a credit card. It’s important to have that option, even if you don’t use it on a regular basis. But to make that possible, you need a credit score.

Don’t confuse credit scores with credit card debt

Getting into credit card debt is bad news. It can cost you a lot of money in interest and make your financial life very difficult.

But there’s a huge difference between having a credit score and having credit card debt. One does not have to result in the other.

You can build credit in different ways so you end up with a credit score. But giving yourself access to credit doesn’t mean you’re headed for a life of debt. Neither does using credit cards, for that matter.

In fact, when used correctly, the right credit cards could put cash back in your pocket just for making everyday purchases. And if you pay off your credit cards every month in full and on time, that could be your ticket to boosting your credit score.

So one important thing to recognize is that while Dave Ramsey might say you don’t need a credit score, it’s not that he’s anti credit scores so much as he’s against credit card debt, and debt in general. And that’s not a terrible thing.

Ramsey’s views may be extreme, but he knows what it’s like to have piles of debt you can’t keep up with. That’s why he’s made it his mission to educate consumers on the dangers of debt and to strongly suggest avoiding it at all costs.

But do understand that having a credit card or credit score won’t automatically mean you’ve worsened your financial situation. In many cases, access to the right credit cards and a solid credit score are great ways to help your financial picture look even brighter.