Zero Fico Score

[Anonymous]

Ok, I have read through this thread and it is obvious that none have gone through Dave Ramsey's program or listened to him on a consistent bases. You that pay off your debt are in the minority in this country and are doing the right thing. You are not his audience. 90% of this country and almost all of his audience has a problem with credit and have the wrong mindset. He has no problem with the way you are dealing with debt. He is trying to get the people that have the problem to change their habits and that is to get rid of their CC's and other debt. If they have access to it more than likely they will use it, that is what he is trying to avoid. If he can get them in the habit of saving and not using credit and they can see the benefits, later when they understand the principles and know how to save money he says he has no problem if you spend it. He does. He also believes in investing and has averaged 15-18% on Mutual funds which is better that earning some rewards points. And yes, I have been through his program.

[MidnightVoice]

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seaind wrote:
Ok, I have read through this thread and it is obvious that none have gone through Dave Ramsey's program or listened to him on a consistent bases. You that pay off your debt are in the minority in this country and are doing the right thing. You are not his audience. 90% of this country and almost all of his audience has a problem with credit and have the wrong mindset. He has no problem with the way you are dealing with debt. He is trying to get the people that have the problem to change their habits and that is to get rid of their CC's and other debt. If they have access to it more than likely they will use it, that is what he is trying to avoid. If he can get them in the habit of saving and not using credit and they can see the benefits, later when they understand the principles and know how to save money he says he has no problem if you spend it. He does. He also believes in investing and has averaged 15-18% on Mutual funds which is better that earning some rewards points. And yes, I have been through his program.

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I agree with some of what you say, but that does not change the fact that some of his advice is fiscally stupid.

And using credit cards and saving money and getting rewards instead of wasting money, has nothing to do with, and no relation to,  investing part of one's earnings.  And the average return one gets from one's investments also has nothing to do with, and no relation to, one's use of credit cards.

It is this sort of fuzzy, fiscally ridiculous thinking that Dear Dave seems to engender, and that is one of my complaints against him.

[atlastontheroad]

MidnightVoice wrote:

No rewards, no interest on money one cannot keep in a savings account, no extended warranty for free, no travel insurance for free, no theft protection for free, no hire car insurance for free, no accidental breakage repolacement for free.

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You may have spent half your life not living in the country of your birth but your accent comes through loud and clear - sometimes.

atlast...colour me silly

[MidnightVoice]

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atlastontheroad wrote:

You may have spent half your life not living in the country of your birth but your accent comes through loud and clear - sometimes.

atlast...colour me silly

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You ought to really hear "The Voice" in action!! 

[Anonymous]

Someone mentioned that they couldn't get a mortgage with no scores - that is completely incorrect.  I do it all year long through Fannie or FHA.  Don't let the bank tell you that you have no scores and they can't help you - call someone that can.

[KingAdrock]

I think the biggest problem is Ramsey seems to push the idea (and even believes it himself, maybe?) that credit & debt are one and the same. This is completely false.

Preaching that debt is bad and you should do what you can to get rid of it makes loads of sense. But getting rid of your credit, once the debts are gone? That's throwing out the baby with the bathwater.

[MidnightVoice]

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KingAdrock wrote:
I think the biggest problem is Ramsey seems to push the idea (and even believes it himself, maybe?) that credit & debt are one and the same. This is completely false.

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Bingo.

I read this frequently - "you have to be in debt to get a good FICO score".  This is totally wrong.

[montanadem]

Beware of using 6 or 12 month same as cash financing. I have been doing this for years so I can leave my money in the bank to earn interest and have taken a hit on my fico score. It says I have too many inquiries (3) over the last three years. I think Fico is discriminating against those of us that built our houses and owe no money and our bills are paid off.

[KingAdrock]

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@montanadem wrote:I think Fico is discriminating against those of us that built our houses and owe no money and our bills are paid off.

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No, it's just if you have no credit on your report, there's no way for anyone to tell if you can handle credit wisely or not.

[Anonymous]

The whole purpose of FICO and your credit report is to gauge how well you pay back your obligations. When you buy a house or make a large purchase, unless you are paying 100% cash, you are asking for a very very big loan, in which the lenders would wisely want to know what your track record is regarding paying off loans.

So I don't think it is accurate to say that FICO is biased against people who pay cash. It is not... unless you want to get credit... because as soon as you try to get credit, you have to prove that you can handle credit since you paid for everything cash. If someone uses cash for everything, then they would have no need for a FICO score.

Put yourself in the bank's shoes. If you were about to loan someone $100,000 for a house, wouldn't you like to know if this guy can even handle $10,000 in credit payments over time?

Credit is something that is useful to have if not abused, especially in case of emergencies. (Like someone mentioned, is it better to 1.) borrow in an emergency or 2.) bounce a bunch of checks or get fired from your job because your car is broke down or not visit your mother in the hospital? Borrowing a few dollars for a short period of time would be better than the alternatives in option 2.)

Also, no one has mentioned something that is older than the credit card, involves no debt or interest of any kind and yet still goes on your credit report. What could it be? The charge card. Yes, there is an annual fee, but 1.) there is no interest and 2.) you have to pay the full thing off at the end of every month and 3.) it reports to the credit bureaus and 4.) it has various perks and rewards as well.

You could treat a credit card as if it is a charge card (which is what many smart people do) but if you are so set on not having any debt but still need a FICO score for a major purchase on credit in the future, then a charge card should fit your philosophy just fine since you are not acquiring (and not allowed to acquire) any long term debt. In fact, one could argue that it is not even debt, since it is more akin to getting invoiced for everything you buy rather than paying at the time of sale.