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."
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FAQs
An excellent credit score is one that's in the highest credit score range. Under the FICO scoring model, it's technically referred to as exceptional credit, and it's from 800 to 850. Under the VantageScore model, excellent credit is between 781 and 850.
Why is the FICO score really an I love debt score? ›
Because they aren't taking on more debt! Around here, we like to say a credit score is just an “I love debt” score. Think about it. A credit score doesn't reflect your salary increases, the amount of money in your savings account, or how well you budget each month.
What was the perfect credit score? ›
A perfect credit score of 850 is hard to get, but an excellent credit score is more achievable. If you want to get the best credit cards, mortgages and competitive loan rates — which can save you money over time — excellent credit can help you qualify. “Excellent” is the highest tier of credit scores you can have.
What is Dave Ramsey's position on credit cards? ›
Dave Ramsey doesn't deal with credit cards. His major advice with credit cards is to cut them up. Cut them in half, shred them, dispose of them and never ever use them.
Is a 900 credit score possible? ›
Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.
How rare is a 840 credit score? ›
Your 840 FICO® Score falls in the range of scores, from 800 to 850, that is categorized as Exceptional. Your FICO® Score is well above the average credit score, and you are likely to receive easy approvals when applying for new credit. 21% of all consumers have FICO® Scores in the Exceptional range.
Who gives the most accurate FICO score? ›
Simply put, there is no “more accurate” score when it comes down to receiving your score from the major credit bureaus.
What matters more FICO or credit score? ›
"For years, there has been a lot of confusion among consumers over which credit scores matter. While there are many types of credit scores, FICO Scores matter the most because the majority of lenders use these scores to decide whether to approve loan applicants and at what interest rates."
Is your FICO your actual credit score? ›
Is "credit score" the same as "FICO® score"? Basically, "credit score" and "FICO® score" are all referring to the same thing. A FICO® score is a type of credit scoring model. While different reporting agencies may weigh factors slightly differently, they are all essentially measuring the same thing.
What is the average credit score in America? ›
What is the average credit score? The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850.
A bad credit score is a FICO score below 580, meaning it falls in the poor credit range. Along the same lines, a bad score in the VantageScore model is one below 601, which would belong in the poor or very poor credit ranges.
What habit lowers your credit score? ›
Late or missed payments can cause your credit score to decline. The impact can vary depending on your credit score — the higher your score, the more likely you are to see a steep drop. Late or missed payments can also stay on your credit report for several years, which is why it is extremely important to avoid them.
Why doesn't Dave Ramsey like credit cards? ›
Terms may apply to offers listed on this page. Dave Ramsey doesn't think credit card points are worth it because you may spend more with credit cards. Ramsey also believes that you are likely to get into debt if you use credit cards. The reality is that rewards are well worth it if you use credit cards responsibly.
How much does Dave Ramsey say to have in savings? ›
Ramsey's general recommendation in his Baby Steps has long been to start with having $1,000 saved in a starter emergency fund. If you earn under $20,000 a year, the post on Ramsey Solutions said you may adjust this amount to $500.
How many credit cards should you have? ›
Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time. Having very few accounts can make it hard for scoring models to render a score for you.
How rare is an 850 FICO score? ›
While achieving a perfect 850 credit score is rare, it's not impossible. About 1.3% of consumers have one, according to Experian's latest data. FICO scores can range anywhere from 300 to 850.
What is considered an excellent FICO score? ›
What is the highest possible FICO score? ›
If you've ever wondered what the highest credit score you can have is, it's 850. That's at the top end of the most common FICO® and VantageScore® credit scores. And these two companies provide some of the most popular credit-scoring models in America. But do you need a perfect credit score?
What is tier 1 FICO credit score? ›
What Is The Tier 1 Credit Range?
| Credit Tier | Description | Credit Score Range |
|---|
| Tier 1 | Excellent Credit | 800 – 850 |
| Tier 2 | Great | 740 – 799 |
| Tier 3 | A Good Credit Score | 670 – 739 |
| Tier 4 | Fair | 580 – 669 |
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