Actually, You Need a Credit Score

Credit ScoreLast month, The Minimalists did a podcast on debt. That podcast led to a profusion of tweets about the drawbacks of credit scores. In fact, the underlying message–ripped out of Dave Ramsey’s playbook–was that no one should want a credit score.

The Minimalists by way of Ramsey tweeted out that a credit score is nothing more than an I-Love-Debt score. If you don’t love debt, you don’t want a credit score. At all. None. Nada. Zero. It sounds absurd–and it is–because a credit score in-and-of-itself doesn’t cause the debt problem. By their logic, I should throw away my mirror if I don’t like my hair. I should get rid of my scale if I don’t like my weight. And I should probably disregard those wellness screenings I get every year. Those warning lights on my car dash? Apparently, my car can’t have problems if warning lights don’t exist.

The reality of a low credit score is that it reflects a small slice of a vastly complex conundrum, just like a check engine light or a thyroid test result. It is one piece of someone’s overall financial health. It’s not the only piece, nor is it the most important piece. But it is a piece nonetheless. So let’s not ignore it, okay?

Instead of thinking of a credit score as an I-Love-Debt score, I think of it as a Make-Money-Work-For-Me score. Money is a tool. Learn to leverage it. A healthy credit score matters. Not convinced? If you ever plan on doing any of these things, someone is probably going to take a hard or soft look at your credit score:

  • Buy a home.
  • Rent an apartment.
  • Take out a loan.
  • Employer background checks.
  • Set up utilities, Internet, or cable.
  • Rent a car.
  • Open a bank account.

So credit scores do count for something. Of course, if you can pull a Dave Ramsey and pay cash for your mega mansion, you don’t need a credit score. But for the average person, having an understanding of credit is important because it plays a role in establishing a financial foothold. Saying it doesn’t either speaks from a position of ignorance or privilege. And if Ramsey is the financial guru he’s lauded as I’ll let you decide which camp he lands in. While it may be true that you can work around credit inquiries, why put someone in a position where they have to learn to do that?

Besides possibly needing a credit score when establishing yourself as a homeowner, renter, employee, or TV binge-watcher, a high credit score can open a lot of doors for people. If we’re going to teach financial fitness, let’s share all the possibilities. Let’s not limit people.

Here’s a short list of ways in which I’ve put my credit score to work:

  • Financed my Master’s degree and wedding with 0% cards – hello, bonus points!
  • Travel hacked my way to cheaper vacations
  • Qualified for a better mortgage loan rate to the tune of .50%
  • Financed a car for 0% – gasp, I know!

And I’m sure there are all sorts of other ways that my credit score works on my behalf that I haven’t even stopped to consider. The fact of the matter is debt is a problem, but credit scores are not. Like most things finance related, with a deeper understanding, this is one more tool that can put money to work for you.

So Tell Me…What do you think of credit scores? Have you ever put yours to work for you?

Actually, You Need a Credit Score

The Danger of the Single Source

Single Source (1)Bill Nye once said, “Everyone you will ever meet knows something that you don’t.” And therein lies the danger of the single source. She’s the mouthpiece of personal finance. He’s the only financial expert Americans need. I shudder when I hear people speak about any singular financial figure and his or her theory as prophet and gospel. The speed at which soundbites are shared on social media sans attribution only compounds this issue. Is everybody reaching similar conclusions or is everyone parroting back one person’s ideas? Continue reading “The Danger of the Single Source”

The Danger of the Single Source

I’m All for Investing, I Just Don’t Believe in Those Rates

RatesWhen my grandma was alive, one of her favorite things to do was to marvel at the cost of everything in the grocery store. We’d scoot up and down the aisles, and she’d rattle off the cost of a loaf of bread, a sack of sugar, or a pound of butter from her Depression-era childhood. Though not nearly as consistent, either my mom or my dad will regale me with tales of CDs and savings accounts rates from their early adulthood once or twice a year. Anyone who has ever overheard those conversations knows they’re talking about the past. So why are we still talking about investment returns at 10%-12% mark in the present tense? It’s not that I don’t believe in investing; I just don’t believe in those rates. I especially don’t believe in those rates as a guideline for fledgling investors or people who are just trying to get their finances in order in 2016.  Continue reading “I’m All for Investing, I Just Don’t Believe in Those Rates”

I’m All for Investing, I Just Don’t Believe in Those Rates

Does It Really Matter Where Dave Ramsey Lives?

Where Dave Ramsey LivesOne of the most fascinating aspects of personal finance is the fact that it is comprised of individual stories, goals, wisdom, and opinions. I have read certain bloggers state unequivocally that if you have not experienced debt, your authenticity as a personal finance blogger is questionable at best. I’ve also seen readers lambaste bloggers in comment sections for not acknowledging enough of the privilege that they were born into. Debates and controversy abound. And when it comes to lightning rods as financial figureheads, I’m not sure anyone fits the bill better than Dave Ramsey. So what I want to know is does it really matter where Dave Ramsey lives?

Continue reading “Does It Really Matter Where Dave Ramsey Lives?”

Does It Really Matter Where Dave Ramsey Lives?