The answer might surprise you.
Finance expert Dave Ramsey has provided lots of financial advice to people about getting their money lives in order. But when it comes to one of the most important money metrics -- your credit score -- Ramsey isn't interested in helping you improve yours.
Ramsey reveals he has a very low credit score of his own -- but what is his score, exactly?
Here's what Dave Ramsey says his credit score is
When it comes to his credit score, Ramsey indicates his isn't very good. In fact, he says he "let his score drop to zero."
The reality, though, is that it's not possible to have a 0 credit score. You might not have any credit file on you at all if you have never borrowed money. This would mean you don't have a credit score at all -- not that you have a 0 credit score.
But, once you take out a loan, open a credit card, or borrow money from a lender, a credit file is opened on you. When that happens, you are assigned a score by different credit reporting agencies -- but that score usually cannot drop below 300.
So, if Ramsey has a credit file on him because he borrowed in the past, he might have the lowest possible score -- but on most credit scoring metrics, that would mean he was in the 300s, not 0.
Ramsey's credit score doesn't matter -- but yours does
While Ramsey's credit score isn't 0, it probably is pretty low for a simple reason: You need to use credit in order to have a good score. Ramsey is very anti-debt, so he probably doesn't do that. In order to earn good credit, you need to show creditors you can make payments on time and use your credit cards responsibly without maxing them out. Since Ramsey doesn't borrow, he won't be able to do that.
And, for the finance guru, it's just fine not to have a credit score. Ramsey has a substantial net worth (much larger than most people have), so buying houses or cars with cash isn't a hardship for him.
He also doesn't really need to earn credit card rewards that effectively make his purchases cheaper, since any rewards he would earn by using cards would likely be so small relative to his income that he'd hardly notice them. And since he probably has a ton of money in the bank, he won't be bothered by having to make larger deposits if he signs up for utilities or wants a cellphone, since he doesn't have good credit to show these companies he's responsible.
Ramsey also works for himself, so he's not going to have to undergo credit checks to get a job. And if his auto insurance is a little more expensive because he doesn't have a credit file, it's not going to make much of a difference to him.
Most people, though, are going to need to borrow money at some point. And they won't want to pay more for insurance, make larger utility deposits, have a harder time getting a job due to no credit history, and cope with all the other downsides of having no credit score or a low credit score. So unless you have such a high net worth that you can accept all the downsides of having no credit, you should make sure not to follow Ramsey's lead and let your credit score drop to "0."
