Dave Ramsey and zero credit score?

[jmjj215]

Re: Dave Ramsey and zero credit score?

"Well-off" doesn't mean "rich." If I'm making $50,000 a year and am debt-free, I'd consider myself well-off. Doesn't mean I could buy a new house for cash, though.

--W@L

Yeah, but Dave says over and over you can get a loan manually underwritten - so really all the "well-off" (sorry for reading too far into that earlier) person only gets nailed on the peripheral FICO stuff. (And I totally agree with you that employers that hire solely based on a FICO 1) probably don't exist and 2) wouldn't be good to work for anyway).

[sweeps]

Re: Dave Ramsey and zero credit score?

Again, I don't think there's any question that FICO scores are used for way more than they should be. One of my long-time complaints is that FICO is a black box. Other than general guidelines, no one but Fair Isaac knows exactly what affects your FICO score and by how much. (This is kinda like a cop writing you a ticket, but not telling you why.)

Here's my argument. Ignoring your FICO score as a form of protest is useless and destructive to yourself. Write letters to your Congressmen, write letters in the newspaper, vote for people who want credit scoring change, whatever. But purposely screwing over your own FICO score is foolish. In my humble opinion.

[debtfreesteve]

Re: Dave Ramsey and zero credit score?

Sweeps, I guess you count me in with the foolish. I don't even know where to get my credit 'score'. (BTW, where do you get it? Guess it's google time) I've viewed my reports, however my score, I haven't the slightest of what it is. I'm purposely not paying the bank, whether it's for all of my purchases over the month, or for revolving balances, car notes, etc. It's not that I'm purposely screwing over my score, it's just the result of not using credit cards. My score is a byproduct of how DW & I have chosen to live, which will make us wealthy folks, versus the shape we were in, living paycheck to paycheck with a 6 figure income. Until I see it affect me, to where I need to open another cc to build it up, I'll choose to stay away.

[Ima saver]

Re: Dave Ramsey and zero credit score?

You get your credit score from any of the three credit bureaus.

[Writer@Large]

Re: Dave Ramsey and zero credit score?

Here's my argument. Ignoring your FICO score as a form of protest is useless and destructive to yourself. Write letters to your Congressmen, write letters in the newspaper, vote for people who want credit scoring change, whatever. But purposely screwing over your own FICO score is foolish.

See, and that right there's the problem. Someone who wants to becomee fiscally responsible and who wants to stop their cycle of debt, someone who wants to cut out the middle-man that is the credit card companies and stop being a source of revenue for institutions that they don't agree with (even if you pay off your credit card each month, you are still a source of income for the CCcompanies through your purchases [retailer fees, transaction fees]) ... those people are labeled "self-destructive" and "foolish." Why? Yet the sheep who keeps swiping his plastic and feeding the FICO frenzy ... that is a wise man?!?

This hype over your credit score is a way to keep you charging. It's a way to keep you in debt, because there's a lot of profit in debt.

One man thumbing his nose may be useless. But if a significant portion of the population collectively says, "not anymore" ...

--W@L

[jmjj215]

Re: Dave Ramsey and zero credit score?

well forgive me jmjj215, but the cornerstone of my frugality is that I DO care if I have to pay anymore than I have to for anything, regardless of whether I'm making $20K, $35K, or 100K per year.

and I also doubt there are or ever will be employers that hire only based on your credit score, but what about those that possibly don't hire because of it? there is a difference. (i.e. I'm a good candidate every other way but I have a low score so they pass on me at the end).


not a concern for me but I can see where that would be unfair to someone else.

Rexdart, if you read earlier in the thread you'll see that I am an advocate of saving all the money you can. It was others that were saying if you're wealthy, what's $300 more a year in car insurance. We share a cornerstone.

[sweeps]

Re: Dave Ramsey and zero credit score?

The 'sheep' who swipes his plastic (and pays it off each month) gets:
- 1-5% cash back... that's free money
- 30-day float to accrue more interest in his savings account
- the ability to dispute a charge when a merchant screws him over
- a continuous build-up of his credit history
- numerous advantages over debit cards including preventing accidental or malicious charges from causing his checking account to be drawn down
- the freedom to not carry around a lot of cash which allows his money to earn interest and prevents his money from being lost or stolen
- detailed billing for budgeting and cash flow analysis
- favorable exchange rates when making purchases outside of the country
... and the list goes on.

[debtfreesteve]

Re: Dave Ramsey and zero credit score?

Sweep, we should be on crossfire my friend.. lol

1. 1-5% cash back is a tool, it's a way to make cc users think that they are getting 'something' in return when in fact, it's proven, people spend 12-20% more. So to get 5% back, most (not necessarily you) are spending 7-15% more, than if they used cash.

2. Not sure how much the difference in interest can be on a 30 day float, has to be just pennies, as if I don't touch the savings account, and only deposits are made, the average balance should be near the same. My peace of mind knowing I owe no one is well worth that difference.

3. This comes straight from Visa... The Zero Liability policy covers all Visa credit and DEBIT card transactions processed over the Visa network—online or off. The only transactions not covered under the Zero Liability policy are commercial card, ATM, and non-Visa-branded PIN transactions.

The info above about the transactions not covered, are for both cc's & dc's

4. Credit history, that is what this topic is about, so those not caring, wouldn't carry the credit card for this purpose.

5. See above

6. We still use the debit card some... but mostly we use cash. Again, saving a hefty % as you tend to spend less, because it hurts to see that $100 bill leave your hands, however when you sign a slip, $300 purchases are no big deal, just swipe and sign... pay later.

7. Detailed budgeting... We are on a zero based budget that is done at the beginning of the month. Instead of looking at a statement, at the end of the month, seeing where your money 'went', You can tell it where to 'go'. It's a control issue, I prefer to control where we spend our $ versus looking at the statement, and going, whoa! we spent What / Where?

8. Favorable exchange rates for purchases outside of the country, would you get the same with a visa debit card? I don't know, haven't purchased too much stuff out of the states...

[sweeps]

Re: Dave Ramsey and zero credit score?

Appreciate the debate, debtfreesteve. Yes, I agree with you that using credit cards wisely requires discipline. Not disputing that. I'm just saying that if you can use a credit card responsibly, it blows away cash and debit card as a financial tool.

Regarding the ability to dispute the transactions. Yes, you can dispute actions on your debit card (but not cash or check of course). The problem, however, is what has happened to your checking account (and savings accounts if you have overdraft protection) while you're disputing a serious accidental or malicious charge against your debit card #. Could bounce a lot of checks, get hit with late fees, and so on.

[Writer@Large]

Re: Dave Ramsey and zero credit score?

At this point I'll mainly "ditto" what debtfreesteve said, as he made most of the points I would have. A few additions:

-- A standard savings account is a pretty poor earner of interest. If that's your only source, I suppose the few cents you get over that extra 30 days may be worth it ... but in the long term, the bulk of your money should be in better investments, anyway.

--I don't get the "lost or stolen" comment. How does a robber know if you have a lot of cash on you? Darn black market x-ray specs ...

And, in fact, I don't carry much cash on me. I use my debit card, or paper checks, or online billpay, for most of my major exchanges.

--Absolutely ditto that debtfreesteve said about zero-dollar budgeting. Besides, I can log on to my bank at anytime and get absolutely detailed records of my debit transactions, including pending payments, etc. What does a CC bill offer me that my debit record does not?

--W@L

[Writer@Large]

Re: Dave Ramsey and zero credit score?

Could bounce a lot of checks, get hit with late fees, and so on.

Not if you've got a properly stocked emergency fund.

--W@L

[sweeps]

Re: Dave Ramsey and zero credit score?

A standard savings account is a pretty poor earner of interest. If that's your only source, I suppose the few cents you get over that extra 30 days may be worth it ... but in the long term, the bulk of your money should be in better investments, anyway.

Good savings accounts pay 4.5% to 5.0%. That's not chump change.

I don't get the "lost or stolen" comment. How does a robber know if you have a lot of cash on you? Darn black market x-ray specs ...

Good one about the x-ray specs. Unfortunately you missed the point. I didn't say there was a better chance of someone losing their wallet or getting mugged if they happened to be carrying around a lot of cash (unless of course you're openly flipping through $100 bills in public which you might have to do if you don't use a credit or debit card). Rather, my point is you can always call to cancel a credit card if it is lost or stolen. You can't call anyone and cancel $200 in cash you might have lost or had stolen.

And, in fact, I don't carry much cash on me. I use my debit card, or paper checks, or online billpay, for most of my major exchanges.

Not if you've got a properly stocked emergency fund.

Having an emergency fund has nothing to do with it. If you have $1,000 in your checking and someone accidentally or purposely debits $1,000 from your account, you're hosed until you discover the problem and take action to fix the problem before you're overdrawn.

With a credit card you have time to discover a bogus charge and correct it without having any damage done to your checking account.

Absolutely ditto that debtfreesteve said about zero-dollar budgeting. Besides, I can log on to my bank at anytime and get absolutely detailed records of my debit transactions, including pending payments, etc. What does a CC bill offer me that my debit record does not?

The detailed billing advantage is an advantage over using cash, not debit cards.

[parafly]

Re: Dave Ramsey and zero credit score?

I have to agree with Sweepsplayer. Using a CC (and paying off the entire balance each month) gives you the most benefits out of any other form of payment. It's up to the individual to be responsible. If you can handle using a debit card regularly, a CC should not be a problem for you.

[jmjj215]

Re: Dave Ramsey and zero credit score?

Besides, I can log on to my bank at anytime and get absolutely detailed records of my debit transactions, including pending payments, etc.

If I remember hearing Dave Ramsey speak about the Dunn & Bradstreet study, he said it's the use of plastic that causes people to overspend because of the removal of the psychological "it hurts more" aspect of using cash. You're overspending on those debit transactions mentioned above by 10-18%.

[Jacklad]

Re: Dave Ramsey and zero credit score?

If I remember hearing Dave Ramsey speak about the Dunn & Bradstreet study, he said it's the use of plastic that causes people to overspend because of the removal of the psychological "it hurts more" aspect of using cash. You're overspending on those debit transactions mentioned above by 10-18%.

That's the problem with the "gurus" - it's all a bit too simplistic. I don't find myself overspending on debit at all - I use it for the same needs that I would have spent cash on. My debit transactions are all free, and because I download my transactions every day (like the previous poster) I can see immediately where the money has gone and can track every penny. I also never end up losing track of the change.

Pre-debit card, I would break a $20 and the rest dribbled away. Since debit card,, I know where everything went and there's no loose change rattling around the corners of my life. The only ones who don't like debit are my kids - they used to always be able to scrounge money (from the seat cushions, in the van, from the laundry). Now they can't, poor things.

Jackie