There’s a danger in not having a credit score at all.
- Financial expert Dave Ramsey is proud of not having a credit score.
- While he may be able to get away with not having one, that may not work for the average consumer.
Your credit score isn’t just a random number. Rather, it’s an indication of how trustworthy you are as a borrower. A higher credit score sends the message that you can be counted on to repay a loan on time and in full, while a lower score sends a warning that a lender may want to think twice before loaning you money.
But what if you don’t have poor credit, but rather no credit? It’s not such an uncommon scenario. If you’re a recent college graduate, for example, who’s never paid bills directly, then there may not be enough financial data on you to establish a credit score.
But it’s not just young adults who don’t have credit. Some people actively choose not to establish a credit history.
Financial expert Dave Ramsey is one of them. As a strong advocate of avoiding debt, Ramsey insists it’s more than possible to go through life without credit. But while not having a credit score may work for Ramsey, it may be more difficult for you.
Why you might need a credit score
There are ways to get by in life without borrowing money. You could save up a whopping pile of cash to buy a home outright instead of having to take out a mortgage. You could save to buy a car outright and avoid having to get an auto loan. And you could forgo credit cards and simply pay for all of your purchases in cash.
But whether you’re able to do those things — and want to do them — is a different story. It’s easy for a person like Dave Ramsey to get by without a credit score. The reason? His borrowing needs are probably limited to non-existent.
Investopedia reports that as of 2021, Ramsey had a net worth of around $200 million. Most of us have a net worth that’s nowhere close to that.
Now, if you had $200 million in assets and wanted to buy a $500,000 home, you probably wouldn’t need a mortgage, either. And so in that case, not having a credit score wouldn’t be a problem.