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TchoupitoulasTiger
LSU Fan
NOLA
Member since May 2011
154 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
Let me sum up Dave Ramsey’s teachings, philosophy, principles, baby steps, seminars, memberships, books, radio shows, podcasts.

Don’t spend more money than you make.

That’s it... the man has literally created a business and a following on this.

I do not believe that a zero credit score is a good idea at all. A zero credit score puts you at the back of the line for receiving a line of credit. Having the ability to borrow and leverage money is important.


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44
Helo
LSU Fan
Orlando
Member since Nov 2004
4424 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
Having a zero credit score on purpose is asinine.
I understand credit scores dropping because people aren't using credit but it doesn't take much to maintain a 650+.

Like it or not, credit scores are used in many other aspects of like like phone service, rental markets, insurance and business transactions.

My uncle who is 59 has paid everything in cash his entire life but when he decided to upgrade to his "final" house, he was just short on cash until he sold his current home. He could not obtain a small bridge loan until my Dad cosigned for him.

Less than 2 month later it was paid off but to have to rely on others for something like this sucks.


SidewalkTiger
LSU Fan
In your head
Member since Dec 2019
11589 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
I'm 26, always pay cash for everything but decided to build credit so I could buy a house. Got a credit card like two years ago, just use it for small purchases and currently have a score of 777.

Closing on my first house in October and was able to put 20% down.


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111
cadillacattack
Auburn Fan
the ATL
Member since May 2020
822 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
quote:

unless you have zero self control



you're kidding, right?



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LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
22291 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
Each score model has some differenes, but there are 5 main factors.

Payment history
Credit Utilization
Credit History Length
Credit Mix
New Credit

Let's say you haven't had any open credit accounts for 20 years.

The first and third factors will be so out of date that the models won't do well with them, and the other three factors are all goin to be zero, which again, is going to mess with the models.

My understanding of the scoring models is that they start from a minimum score (it's not zero) and then add points based on the factors. So it's possible if you had no open credit for 20 years, but still have much older items on a report, you could have a minimal credit score.

If for some reason after such a time, you needed credit, you could find someone to manually underwrite a loan.


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MikeyFL
Georgia Fan
Las Vegas, NV
Member since Sep 2010
7599 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
Even if you're rich enough to pay for everything up front, I'd still suggest having a credit card for the consumer protection. It's dangerous to pay for everything with a debit card, especially if you have a substantial amount of money in your checking account.

Besides, my Fidelity card gives me a flat 2% cash back. It's not a massive amount, but it's a nice way to build my Roth IRA each year.


TDsngumbo
LSU Fan
Member since Oct 2011
24997 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
Dave Ramsey is full of shite when he says not to have a mortgage on your home.

It's true, if you can pay cash for your home, DO IT. However, what he doesn't tell you is that what most wealthy people do is they make sure they always have a HELOC on their home in order to have a mortgage show up on their home. This usually prevents attorneys from trying to go after their home in the event of a lawsuit.

My family consists of some extremely wealthy people (no shit, probably one of the wealthiest people in the state of Louisiana) NOT ME though LOL - and they've been doing this on advice from their attorney for decades. They have HELOC's on all of their properties even though they're all paid off just so they can add a small bit of extra protection. It's not fool-proof, of course, but it does add a small bit of additional protection.

And they go through hell every time they apply to renew the HELOC's because they have zero credit and have to submit shitloads of statements in order to be approved each time


Tigerlaff
LSU Fan
Member since Jan 2010
16178 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
Dave's system is not a philosophy meant to apply to everyone. It is for people who have fricked up and lack self control.

When you are an alcoholic, never touching a drink again is a smart move. If you got a hangover one time when you were 21, never touching a drink again is not really the most prudent life decision.


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40
deeprig9
Georgia Fan
Member since Sep 2012
40635 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
The last time I tried to rent a car without a credit card, I had a bad time.

I imagine hotel rooms would be a no-go as well.



Double Oh
Louisiana
Member since Sep 2008
10706 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
quote:

It's dangerous to pay for everything with a debit card, especially if you have a substantial amount of money in your checking account.



Do what? Your debit card has a limit on it correct? Why would it be dangerous?


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deeprig9
Georgia Fan
Member since Sep 2012
40635 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
quote:

Why would it be dangerous?


When a criminal steals your debit card number and wipes it out, they have virtually robbed the bank and took your money out of the vault, it's gone.

When a criminal steals your credit card and runs it up, they only person who has actually lost money is the merchant, not you.

Bank laws.

Yes, some banks are nice enough to extend those protections to your debit card, but they aren't required to.


castorinho
Oklahoma Fan
13623 posts
Member since Nov 2010
69364 posts
 Online 

re: Can Someone Explain Dave Ramsey's 0 Credit Score
quote:

Do what? Your debit card has a limit on it correct? Why would it be dangerous?
cybersecurity. Disputes. Customer service.


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Upperdecker
LSU Fan
St. George, LA
Member since Nov 2014
22638 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
Your credit history is 7 years. If you have no debt and use no credit for 7 years, your credit score will have no history. Which is essentially no score, bc it means they can’t predict your credit usage based on past results


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jfw3535
Bradley Fan
South of Bunkie
Member since Mar 2008
592 posts
 Online 

re: Can Someone Explain Dave Ramsey's 0 Credit Score
Seems like a lot of work to make $212. And I think his point is, if the furniture is paid for in full, up front, and some major life catastrophe hits you still have your furniture. But if you finance and you somehow wouldn't be able to afford your monthly furniture payments anymore, now you've got the furniture creditor coming to repo his furniture.

I do think Dave is a bit too over the top and I like a modified version between Dave Ramsey and Suzie Orman myself. But for me personally, I was rolling along for a long time with lots of debt - personal loans, student loans, car notes, kids' braces on financing, etc, until I got into listening to Dave years ago. It made me tighten my purse strings (but not live on rice and beans) and get serious about paying off my debts. I did so with laser focus for a couple years and now I live debt free other than my mortgage. Student loans are gone, cars are paid in full, credit cards are paid off monthly. I will say, it is nice not having any debt or payments (other than a mortgage). At this point, financing furniture or something would never even cross my mind. I'd just write the check and be done with it. For me, I like the piece of mind and to be able to amass wealth toward my retirement.


cgrand
New Orleans Pelicans Fan
HAMMOND
Member since Oct 2009
23148 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
quote:

The last time I tried to rent a car without a credit card, I had a bad time.

I imagine hotel rooms would be a no-go as well.

you can have a credit card (visa or MC) without it being tied to a personal credit account


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SammyTiger
LSU Fan
New Orleans, LA
Member since Feb 2009
41433 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
It’s a weird audience

If you have good credit than you probably are smart about taking out loans that you can pay.

If you have shite credit you probably aren’t in a position to pay off your debt to begin with.


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Bard
LSU Fan
Tigerdroppings Platinum Member
Member since Oct 2008
38500 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
quote:

His whole premise is that people are not disciplined enough to do the right things so do it my way.


Many are absolutely not disciplined enough to see that for them debt is a slippery slope and they're covered in grease. For them the only real way to manage debt is to simply not have it.


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whitefoot
LSU Fan
Franklin, TN
Member since Aug 2006
7414 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
quote:

Seems like a lot of work to make $212

A lot of work? You spend 5 minutes longer than if you were writing a check. And this was just a risk-free example of what you can do with the cash, and using today's paltry savings rates. With a 5 year horizon, you could put it in an S&P index fund and make thousands. The average annual return for the S&P over the last 20 years is 5.9%. That would be a nearly $2000 return over 5 years. Just for spending an extra 5 minutes at the furniture store.

quote:

But if you finance and you somehow wouldn't be able to afford your monthly furniture payments anymore, now you've got the furniture creditor coming to repo his furniture.

I never suggested taking the furniture money and blowing it. I said to save it and make money with it. If something happens, you can just pay the monthly payment out of the savings/brokerage account, or pay it off entirely.

Back to your original point, if someone asked you to sit around for 10 minutes and they'd bring you $200, you wouldn't wait? You'd just leave?

Also, is it truly debt if you can pay it all off tomorrow without jeopardizing your retirement savings or emergency fund?

quote:

I like the piece of mind and to be able to amass wealth toward my retirement.

That's great, but you might not be maximizing your returns. Amassing wealth is all about compounding your money over time. Get as much money in as early as you can and watch it grow.

$6000 would be your maximum IRA contribution for the year. Put it in a Roth IRA instead of paying cash for the furniture and you can take it out without penalty if you need to tap into it.

There are so many things you can do with that money and the furniture store is just giving it to you for free.

Honeslty, I'd almost never consider paying for something in cash over a 0% interest deal. I'm extremely disciplined, though. Our home mortgage is the only debt we have that carries any interest.


jfw3535
Bradley Fan
South of Bunkie
Member since Mar 2008
592 posts
 Online 

re: Can Someone Explain Dave Ramsey's 0 Credit Score
To each their own. But I will say that it's more than an extra 5 or 10 minutes at the furniture store. It's also the 60 times over the next 5 years I have to remember to make the payment and to take the time to actually make the payment, log it into my bank register and deal with all that. That may not be a huge amount of time and may be time well spent for you to earn $212, but for me, it's not. As I said, you do you, I'll do me. Doesn't sound like either of us are irresponsible with our money or in jeopardy of going to the poor house any time soon.


notsince98
Missouri Fan
KC, MO
Member since Oct 2012
12891 posts

re: Can Someone Explain Dave Ramsey's 0 Credit Score
quote:

Dave Ramsey is for financial dumbasses. There is zero reason to put your credit cards in a blender unless you have zero self control


Those are the people going to DR for help.....so....


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