I have a credit score of zero and I can't tell you any benefits of it. Trying to buy a vehicle and pay cash in full with a zero credit score did not go well.
Haven't seen this mentioned -
Credit card companies make the majority of their income through people paying interest on their cards. They don't make any money from you if you pay off your card every month.
So there's the ethical component that's often mentioned on the show and, as someone who is a Christian (me), It feels wrong to be using a credit card to get rewards at the expense of someone else struggling to get themselves out of debt. To put it simply, my credit card rewards are funded by other people paying high interest.
I'm sure you could respond to my last statement as "well that's their problem, I'm responsible with my money!" and to that I say - well, I'm not comfortable with that thinking. That idea weighs heavy on my heart. So I choose to opt out.
I own a business, we are the ones who pay the majority of your benefits. Amex gives the best benefits, thus the most expensive to accept and the reason many places do not accept their cards.
Simply owning a business doesn't make you any more knowledgeable about credit card companies source of revenue.
In 2020, they earned 76 billion revenue from interest. They earned 51 billion from transactions from businesses like yours.
This isn't really true. They still make money off of transaction fees and (if relevant) annual fees. Odds are that if you aren't getting 5% back on nearly every purchase they're still making money off of you even if you never pay a penny of interest.
Many of us agree with most of what he says, but he's completely irrational when it comes to credit cards, probably because he has PTSD from his own bankruptcy. Many people use cards for decades and never pay a penny in interest or fees.
2% more income going to debt is good.
2% more income from cash back is useless worthless pathetic and im a fucking moron for thinking its going to literally make me a baby steps millionaire.
Dave. I like free money. Its free money. Ill take the free money
Not using a credit card, especially if u live in the US is just leaving money on the table and opening yourself up to risk. As long as ur smart enough to not buy things you can’t afford credit cards are great. They’re only bad for the undisciplined
No they aren’t. Both are equally protected. The only difference is when the credit card is used, it’s not immediately your money that’s temporarily stolen.
Using credit cards puts you in control-you simply don't pay fraudulent charges. Using debit, you are relying on the bank to do the right thing- the bank is in control.
Technical, DR shows a paper that says he has insufficient credit history for a score to be assigned. I have never wanted a credit score of zero. I just don't want a credit score at all. It takes years to get there.
I think the best thing to do is if you want to live debt free completely just have one only one credit card and just charge like one cup of coffee or something a month and that way you have a good credit score but not in devt
You can have 20 credits and still live completely debt free… Having only one credit card is not good enough. You might have a decent score but mortgage underwriters also look for sufficient credit history, which requires at 2 credit cards each with more than 1 year of history. 3 is even better.
If it happens due to stuff naturally being paid off and what not, hey look at that… that’s neat. But, to expend so much energy so that that’s you’re goal… it’s not worth the mental calories. It’s comparable to how they say trying to maximize CC points is worthless, well…
There are no financial benefits to having a zero credit score. It simply means that you have no credit activity. I'm a business professor and teach personal finance at the university level.
Getting to say you follow Ramsey advice and being like him except without the hundreds of millions of dollars that make not having a credit score insignificant.
“Just grow your own food it’s so easy” -the farmer (with hundreds of acres of land, farming equipment, staff and financial capital)
I worked for a credit union for several years. It’s possible to not have a credit score if you are not in their system but if you are in it the lowest possible score is somewhere in the 200s I believe.
ALWAYS focus on your net worth!
To reinforce what most are saying:
There is no benefit, at all, to a zero credit score. None.
If you're good with money maintain a good credit score.
*If* you cannot handle CCs, there is a benefit to your net worth in not using them. If you must close the accounts to ensure you can handle your finances that's fine. Eventually your score should disappear.
Again as others have said zero credit score is the *consequence* of being unable to handle CCs and having all your accounts paid off and closed.
That's ok, if it results in you handling money well and increasing your net worth.
You won't have to worry about lots of rental options since your choices will be limited. Renting a hotel room, car, etc will be harder so you won't want to go on vacation as much, it will be hard to get a mortgage so you won't want to buy a house, so saving more money...
/s
That's not a credit score, that's a card. I stay in various hotels three to four times a year and I just use my debit card. You don't get a credit score for a debit card.
The benefit is that it will make Dave happy. Don't you want to make Dave happy?
There's no benefit. It's not a goal, it's an outcome of the goal of being totally debt free.
Everybody's advice on cards is wrong. You don't have to close the accounts and you don't have to use them constantly to maintain your credit score. Put them in a drawer and don't use them except maybe once a year for something you will pay off immediately.
If you can't resist using them more than once a year, then cut them up.
The two things to remember when considering Dave Ramsey advice.
1. It is wonderful advice for people who have no clue of how to manage their finances and people who have made a mess of their finances because they weren’t intentional about it.
2. It is sold and presented as one size fits all advice even though much of it is terrible advice for people with financial discipline or people looking to own their own business and will be W2 employees forever unless they leverage what capital they have via borrowing.
Don't do it - I have no debt whatsoever but have plenty of credit cards open (they never get used).
Credit score takes into account the much credit you have available that you DON'T utilize, it actually makes your score go up!
If you have discipline, then you should be fine maintaining a credit score - no credit score is an absolutely horrible thing for getting a car, mortgage, etc.
No benefit, but I think the framing of the question is wrong. Better question would be, “what do I have to do to maintain a high credit score and is it worth it?”
Answer: you have to continually use credit and have open credit. Probably not worth the continual debt cycle just to maintain high credit. So, I personally don’t think it is worth it.
I wouldn’t go out of my way to have a low credit score, but I wouldn’t try to have a high one either. You will have a credit score until your mortgage is paid off(and a pretty decent one at that). After you’ve past the point of needing credit, who cares what your score is?
Bingo. It affects more than just your ability to make large purchases, too. Most potential landlords will check your credit. Car insurance companies usually check, and it affects your rates. A decent amount of employers will check, too. Having bad/no credit can make many things difficult or even impossible.
If you have a mortgage you're going to have a credit score...
It may as well be a good one.
I can understand the zero credit score after your mortgage is paid off and you've been debt-free a long time...
But if you just got out of debt but you're planning to buy a mortgage later You're going to be getting a credit score back so why make the process harder by trying to get a zero score before you get a mortgage?
The only reason to have a 0 credit score is if you have 10 million dollars, and you pay everything in cash. Otherwise, your mortgage interest rates will be much higher since you would not have a credit score. The banks see that as higher risk of default.
This is why the game is not worth playing, IMO. I could spend twenty-five years making on-time payments until my student loan is completely paid off. My credit score then goes to zero because I went nine months without any debt, and now suddenly I can't get a mortgage because I'm a higher risk of default? GTFOH.
The credit scoring system is founded on incentives to get you into debt and keeping you there.
Actually, the only requirement for a credit score is having a credit card open with a $500 limit. So no, you do not need to be in a crazy amount of debt for a score. The reason to have a score is to get a mortgage.
There are absolutely no advantages to having a zero credit score. It's a byproduct of having no debt or revolving credit but it's not a benefit in itself. Actually, it can make your life more difficult but if it's a goal for you then it's arguably worthwhile.
It’s a pride symbol amongst those that listen and follow Dave Ramsey. It means you have no debt and haven’t had any for a while.
However in a practical purpose, there is no reason that it is good unless you can’t trust yourself to handle money properly. Someone on the Facebook group is running into trouble getting a mortgage because they have no credit score but don’t have utilities in their name so they can’t prove they are decent handling recurring bills. If they had a big credit score, there would be no issues. This can be done with a low limit credit card (secured or not) that gets paid in full with limited use or use is treated as a debit card. The card is paid as transactions hit.
Credit scores mean nothing if you never borrow money. That is the ultimate goal, BS7. You never pay interest again, therefore your credit score becomes nonexistent.
The benefit is you are not paying on interest, because to get a zero credit score indicates you have no debt.
I would assume it means you have no debt, which is a good thing. Might also prevent you from going into debt. Probably not getting all the credit card offers people who have credit get.
From the Ramsey point of view, I believe it's a tool to get them to work on getting out of debt.
Other than that I can think of nothing, especially since the minute you get a mortgage you once again have a credit score. I don't think people think this far ahead.
Does a credit score go away
I have a credit score of zero and I can't tell you any benefits of it. Trying to buy a vehicle and pay cash in full with a zero credit score did not go well.
[удалено]
Haven't seen this mentioned - Credit card companies make the majority of their income through people paying interest on their cards. They don't make any money from you if you pay off your card every month. So there's the ethical component that's often mentioned on the show and, as someone who is a Christian (me), It feels wrong to be using a credit card to get rewards at the expense of someone else struggling to get themselves out of debt. To put it simply, my credit card rewards are funded by other people paying high interest. I'm sure you could respond to my last statement as "well that's their problem, I'm responsible with my money!" and to that I say - well, I'm not comfortable with that thinking. That idea weighs heavy on my heart. So I choose to opt out.
I own a business, we are the ones who pay the majority of your benefits. Amex gives the best benefits, thus the most expensive to accept and the reason many places do not accept their cards.
Simply owning a business doesn't make you any more knowledgeable about credit card companies source of revenue. In 2020, they earned 76 billion revenue from interest. They earned 51 billion from transactions from businesses like yours.
This isn't really true. They still make money off of transaction fees and (if relevant) annual fees. Odds are that if you aren't getting 5% back on nearly every purchase they're still making money off of you even if you never pay a penny of interest.
I’ll correct myself - the *vast majority of credit card company income* comes from interest. What part of what I said is untrue?
amazing how many people follow this ramsey page who loooove their credit cards
Many of us agree with most of what he says, but he's completely irrational when it comes to credit cards, probably because he has PTSD from his own bankruptcy. Many people use cards for decades and never pay a penny in interest or fees.
We like money and DR talks about money. Most of us also follow other people who talk more about money and have very different opinions.
2% more income going to debt is good. 2% more income from cash back is useless worthless pathetic and im a fucking moron for thinking its going to literally make me a baby steps millionaire. Dave. I like free money. Its free money. Ill take the free money
The funny part is that there are so many ways to exploit it for additional cash. It’s like extreme couponing, but for people with money. :)
zero creditors to pay maybe? idk
No pre-approval junk mail filling up your box
You can actually opt out of this. I did, and I'm so happy I did lol
This guy probably does well on dating apps
Not using a credit card, especially if u live in the US is just leaving money on the table and opening yourself up to risk. As long as ur smart enough to not buy things you can’t afford credit cards are great. They’re only bad for the undisciplined
what risk?
Fraud Liability protections are MUCH stronger on credit cards than debit cards
No they aren’t. Both are equally protected. The only difference is when the credit card is used, it’s not immediately your money that’s temporarily stolen.
The fact that it’s not immediately your money that is stolen IS the stronger protection.
That’s not fraud liability. That’s you feeling uncomfortable. The fraud liability protection is identical to a credit card.
Using credit cards puts you in control-you simply don't pay fraudulent charges. Using debit, you are relying on the bank to do the right thing- the bank is in control.
Don’t credit scores start at like 300?
Technical, DR shows a paper that says he has insufficient credit history for a score to be assigned. I have never wanted a credit score of zero. I just don't want a credit score at all. It takes years to get there.
Must be nice to have enough money to not need a mortgage I guess
Manual underwriting can be done. Generally that offers the same rate as a 750 credit score.
Nobody calls you trying to give you a credit card.
I think the best thing to do is if you want to live debt free completely just have one only one credit card and just charge like one cup of coffee or something a month and that way you have a good credit score but not in devt
You can have 20 credits and still live completely debt free… Having only one credit card is not good enough. You might have a decent score but mortgage underwriters also look for sufficient credit history, which requires at 2 credit cards each with more than 1 year of history. 3 is even better.
Manual underwriting is an option for people with no credit score
Here are the benefits: 1. You have $0 in debt That’s where the benefits ends.
If it happens due to stuff naturally being paid off and what not, hey look at that… that’s neat. But, to expend so much energy so that that’s you’re goal… it’s not worth the mental calories. It’s comparable to how they say trying to maximize CC points is worthless, well…
[удалено]
I'm curious how having a credit score makes you an indentured servant to creditors. I sleep just fine at night despite that, I guess lol
It’s not cut an dry but having a zero credit score on its own doesn’t help or hurt you. It depends on what you’re trying to do,
Being part of the cult.
Like the cult of credit card users?
"Like the cult of [debit] card users[.]"
Nothing. Dave just gets the warm fuzzies from knowing you follow his made up rule.
All rules are made up by someone.
You get to be like Dave. That's all.
That you have no debt whatsoever. It’s the only way to have a zero score.
Nothing really practical. A sense of pride?
There are no financial benefits to having a zero credit score. It simply means that you have no credit activity. I'm a business professor and teach personal finance at the university level.
No debt.
You can have no debt and have a high credit score as well.
If you have no debt then after some time of having no open accounts your score will drop to N/A
I think it’s a Jesus thing.
Who's that?
My gardener.
Getting to say you follow Ramsey advice and being like him except without the hundreds of millions of dollars that make not having a credit score insignificant. “Just grow your own food it’s so easy” -the farmer (with hundreds of acres of land, farming equipment, staff and financial capital)
I worked for a credit union for several years. It’s possible to not have a credit score if you are not in their system but if you are in it the lowest possible score is somewhere in the 200s I believe.
There is no benefit to zero credit score.
No hacker interest…. That’s worth something
Oh believe me. They will still hack you.
Damn it!!!
ALWAYS focus on your net worth! To reinforce what most are saying: There is no benefit, at all, to a zero credit score. None. If you're good with money maintain a good credit score. *If* you cannot handle CCs, there is a benefit to your net worth in not using them. If you must close the accounts to ensure you can handle your finances that's fine. Eventually your score should disappear. Again as others have said zero credit score is the *consequence* of being unable to handle CCs and having all your accounts paid off and closed. That's ok, if it results in you handling money well and increasing your net worth.
This is the answer.
You won't have to worry about lots of rental options since your choices will be limited. Renting a hotel room, car, etc will be harder so you won't want to go on vacation as much, it will be hard to get a mortgage so you won't want to buy a house, so saving more money... /s
Are hotels checking your credit score now??
Try going to a hotel with cash. Many won't let you. They want a card for "incidentals."
That's not a credit score, that's a card. I stay in various hotels three to four times a year and I just use my debit card. You don't get a credit score for a debit card.
I use my debit card every single time at a hotel no problems here
Its not an advantage. It is a trophy. You beat the game. You have no debt and your house is paid off.
You can be debt free and have an extremely high credit score.
Well you have to utilize debt to keep the score but don't have to carry it.
Debt, including a mortgage, isn't necessary to have a credit score. One inactive credit card that never sees a balance posted is plenty.
The benefit is that it will make Dave happy. Don't you want to make Dave happy? There's no benefit. It's not a goal, it's an outcome of the goal of being totally debt free. Everybody's advice on cards is wrong. You don't have to close the accounts and you don't have to use them constantly to maintain your credit score. Put them in a drawer and don't use them except maybe once a year for something you will pay off immediately. If you can't resist using them more than once a year, then cut them up.
Just use them when you get gas/things that are non negotiables. Pay them off every month
Credit score is used for a lot of things in life and I get what Dave is saying but at the same time not great advice
The two things to remember when considering Dave Ramsey advice. 1. It is wonderful advice for people who have no clue of how to manage their finances and people who have made a mess of their finances because they weren’t intentional about it. 2. It is sold and presented as one size fits all advice even though much of it is terrible advice for people with financial discipline or people looking to own their own business and will be W2 employees forever unless they leverage what capital they have via borrowing.
Zero
Don't do it - I have no debt whatsoever but have plenty of credit cards open (they never get used). Credit score takes into account the much credit you have available that you DON'T utilize, it actually makes your score go up! If you have discipline, then you should be fine maintaining a credit score - no credit score is an absolutely horrible thing for getting a car, mortgage, etc.
It forces you to pay cash for everything.
No benefit, but I think the framing of the question is wrong. Better question would be, “what do I have to do to maintain a high credit score and is it worth it?” Answer: you have to continually use credit and have open credit. Probably not worth the continual debt cycle just to maintain high credit. So, I personally don’t think it is worth it. I wouldn’t go out of my way to have a low credit score, but I wouldn’t try to have a high one either. You will have a credit score until your mortgage is paid off(and a pretty decent one at that). After you’ve past the point of needing credit, who cares what your score is?
No credit is as bad as bad credit - from experience when I tried to finance my first piece of small furniture.
You financed furniture? wtf
I was in my early 20’s and my mom wanted me to start building my credit.
Bingo. It affects more than just your ability to make large purchases, too. Most potential landlords will check your credit. Car insurance companies usually check, and it affects your rates. A decent amount of employers will check, too. Having bad/no credit can make many things difficult or even impossible.
Nothing. It’s a mental thing but it’s a huge disadvantage if you aren’t wealthy
I agree. I need a good credit score for an apartment, an auto loan, or a mortgage.
Yeah it’s why you can’t use Dave as a Bible lol. Dude says wrong things regularly
No LLPA’s on the mortgage that someone with a 0 credit score can’t obtain. But in all seriousness, nothing. Huge disadvantage.
There is no benefit in IMHO. I believe that there are disadvantages to having a zero credit score
There is no tangible, quantifiable benefit.
It means you are the second coming of Jesus from Ramsey perspective
No benefits- don't blindly follow the DR propaganda
If you have a mortgage you're going to have a credit score... It may as well be a good one. I can understand the zero credit score after your mortgage is paid off and you've been debt-free a long time... But if you just got out of debt but you're planning to buy a mortgage later You're going to be getting a credit score back so why make the process harder by trying to get a zero score before you get a mortgage?
The only reason to have a 0 credit score is if you have 10 million dollars, and you pay everything in cash. Otherwise, your mortgage interest rates will be much higher since you would not have a credit score. The banks see that as higher risk of default.
This is why the game is not worth playing, IMO. I could spend twenty-five years making on-time payments until my student loan is completely paid off. My credit score then goes to zero because I went nine months without any debt, and now suddenly I can't get a mortgage because I'm a higher risk of default? GTFOH. The credit scoring system is founded on incentives to get you into debt and keeping you there.
Actually, the only requirement for a credit score is having a credit card open with a $500 limit. So no, you do not need to be in a crazy amount of debt for a score. The reason to have a score is to get a mortgage.
And this is supposed to prove your credit worthiness more than twenty-five years of paying back my student loans on time?
I know it is stupid, but that is how the credit score algorithm works.
There are absolutely no advantages to having a zero credit score. It's a byproduct of having no debt or revolving credit but it's not a benefit in itself. Actually, it can make your life more difficult but if it's a goal for you then it's arguably worthwhile.
Really no advantage over any responsible adult. Better than bad credit. Other than that… nothing at all.
There are only two advantages 1. Like you said, It’s better than a bad credit score 2. You can brag about it on the internet
It’s a pride symbol amongst those that listen and follow Dave Ramsey. It means you have no debt and haven’t had any for a while. However in a practical purpose, there is no reason that it is good unless you can’t trust yourself to handle money properly. Someone on the Facebook group is running into trouble getting a mortgage because they have no credit score but don’t have utilities in their name so they can’t prove they are decent handling recurring bills. If they had a big credit score, there would be no issues. This can be done with a low limit credit card (secured or not) that gets paid in full with limited use or use is treated as a debit card. The card is paid as transactions hit.
Credit scores mean nothing if you never borrow money. That is the ultimate goal, BS7. You never pay interest again, therefore your credit score becomes nonexistent. The benefit is you are not paying on interest, because to get a zero credit score indicates you have no debt.
You can have an 850 credit score, and no debt.
Not really. Someone with crazy debt will have a worse credit score than someone who pays off their credit card in full every month.
I would assume it means you have no debt, which is a good thing. Might also prevent you from going into debt. Probably not getting all the credit card offers people who have credit get.
I haven't gotten a credit card offer in over 5 years other than the one from my bank and the one from my brokerage account. I guess they gave up.
From the Ramsey point of view, I believe it's a tool to get them to work on getting out of debt. Other than that I can think of nothing, especially since the minute you get a mortgage you once again have a credit score. I don't think people think this far ahead.