As someone who is currently looking for a job, I can specifically state that EVERY company I have had contact with has REQUIRED consent to do a credit and background check. They want you to agree with this before you can even apply. While I might agree to this after an offer has been made, that has not been the way it is currently working - even temp agencies want this info before considering you for jobs. As someone who has been living debt free for years now, I see more and more that certain things are more expensive or totally unavailable to me not only because of no debt but "not enough debt for your age." Apparently we are supposed to get into deeper debt the older we are! In this economy, getting a job is extremely difficult. I really hate debt but wish I had more so that I could get a job and not risk being homeless... Isn't there some way this could be addressed?

Frustrated September 07 2010 1:12 PM

I finished the FPU course this spring, and now use debit/cash most of the time. My bank's debit card is also a VISA card, (Dave mentions that kind in the class) so that works for the need when renting a car. I have a dept store credit card that I only use when it offers shopping discounts of up to 30% and/or extra cash coupons. I (mostly) only go when I plan to buy, know from my monthly budget how much I have to spend. Then I come home and go on-line and pay the balance immediately. The problem with using credit cards, even when paying the balance off monthly (as I've done for nearly 30 years), is that when you plan your spending for the upcoming month (per Dave's plan), your credit card balance is for money that was allocated the previous month! Made me crazy - with no cc balance, no more craziness!

Susan July 02 2010 8:23 AM

Insurance rates are based on all types factors...Where you live(I moved 3 miles into a different zip code and my rates dropped $240 a year simply cause I was in a different zip code)What you drive(cheaper car =cheaper insurance)driving record(no tickets or accidents=cheap insurance. Being responsible out weighs being in debt for a high fico score to save a little bit on insurance. As for employment,they're not just looking at your score,they're looking at your history in your credit report and how responsible you are..If you have high amounts or a lot of debt,missing payments,judgments or liens,they're thinking you're going to be stressed and not productive and a ticking time bomb waiting to explode.I personally would rather hire someone that has less stress and be an asset to my company..If you have no debt and a low score,simply let them know why.I'm sure they would love to here of somebody that is so financially fit that has NO debt, no mortgage has a fully funded emergency fund,and doesn't need the job because they have to pay bills,but because they want to be a leader for their company.. For those that still carry a card and pay it off in full every month. Been there and done that..Just hope you don't get injured and you're laid up for six months or something worse...You play with snakes you'll get bitten.. It's not worth the hassle or little bit money you'll save on insurance. If you want to buy a home and you have no debt and have 20% to put down,You will get low rates.I did with my credit union.4.5 on a 15 year.11 more or less years on the house and we'll be completely debt free!!! No one said it would be easy,but it is definitely worth it!!

Jake June 28 2010 2:05 AM

In response to "D" on June 24, you may not be in debt by not carrying a balance from month to month on your 6 credit cards; however, DR claims there is pain involved with parting with cash as opposed to swiping plastic and so we wind up spending more and saving (giving) less when we don't feel that pain.

Cindy June 26 2010 4:41 PM

I have to disagree with Dave on this issue. I originate mortgages and for every 20 points your score drops below 740, the rate goes up. If you don't have to have a mortgage, then the FICO isn't so important but most folks I deal with have no choice. Most of the borrowers I help have great scores and they also typically have little or no consumer debt. My personal philosophy is to put everything I can on a credit card and then pay the bill when it comes in. We use a Visa and a Mastercard that have no annual fees and also pay rewards so you are not out any money for using the card, don't have to hassle with carrying cash around, write one check instead of a bunch of them, and get paid to to use the card to boot. Yes, as Dave says, debt is bad but there are types of debt that help you. If you factor in the extra cost of insurance and the employment issues others have pointed out, having a low FICO or no FICO will cost you money, not save you money. I also do not and will not have a debit card. I've seen too many people get their bank accounts cleared out to run that risk. I see no benefit to a debit card at all when a credit card is a much safer alternative.

Keith Krop June 25 2010 6:27 PM

Your insurance rates are higher or lower depending on your FICO score. It even affects how much deposit you put down. Dave's statement that it affects nothing but debt is inaccurate. BUT DO DUMP DEBT!

Richard June 25 2010 1:02 PM

I mostly agree with Dave when it comes to saving money and paying off debt. But you don't have kill your FICO score if you want to be debt free. I have 6 (yes six) credit cards, and pay all of them off each month, therefore pay no fee/interest and build my credit score. Although, if you aren't diligent paying off the credit cards each month, then stay away from them. The fees/interest will eat you alive!

D June 24 2010 11:11 AM

i'm sorry but in spite of the good of NOT relying solely on credit: it's not necessarily an "evil" thing to have credit. i strongly believe it is how the person manages it and what their focus of money is on. i have 2 credit cards, neither carry a balance (we use it sparingly) and they have very low rates. both cards have a 10+ year-long history and together with other loans i've had in the past it has essentially helped me to establish and keep an overall credit score of 800+. therefore, i've been able to get extremely low APRs and have no problems with rentals, loans, etc. by the way, in this world we live now: credit and fico score is frighteningly, quickly becoming a growing requirement for nearly everything down to employment! i seriously dislike this requirement for day-to-day things but it is here to stay and considering the world we live in it will probably get worse.

J G June 23 2010 12:26 AM

I thought you had to have a good score just to get a job or to get a good rate for you auto and home insurance??? Is this not true?

Patty June 21 2010 4:23 PM

I have never cared about my credit score and guess what? Without even trying i have a credit score in the top 5% of the U.S. population.FICO score is way over rated, it has never crossed my mind of making a good credit score i guess i am weird.I have been sued by creditors and once over $20,000 in credit debt.I just heard of Dave in 2007 on the radio. I have done about everything he teaches on my own w/out any formal education just by being broke you learn alot about saving for a rainy day thank God i grew up poor. Dave is really a hero to me for being able to spread what works to the masses!Daves motivation is captivating! Thanks.

Tony Martinez June 21 2010 1:42 AM

Your F I C O score = You're Financially In Constant Obscurity...

Jake June 21 2010 1:12 AM

Here's an answer to Lynn Goehring's question that was posted on June 17th. I apologize if this has already been answered and I didn't see the post. My wife and I just took a road-trip vacation with her parents, oldest sister and niece. Since there were six of us, my wife and I decided to rent a van so we could all be together comfortably while we were on the road. To make a long story short we ended up renting with Budget Rental (who is also a sister company of Avis) and they allowed us to rent the van with a $400 dollar deposit on our debit card (any debit card that has a major cc logo on it will do). There was a $400.00 hold on our checking account until we returned the van and the difference was drafted from our account a few days later. We had a great trip and no hassles. Another cool thing is, we had already made reservations with another major car rental company only to find out the day we went to pick up the van that they didn't offer the same services (would not allow debit cards) so we went to the next booth over, who was Budget, and ended up saving $130 on the whole transaction! They had a comparable van to what we had already signed up for with the previous rental company and an even better rate, a way better rate! Hope this helps you in your future car rental endeavors.

John Perkins June 19 2010 3:29 PM

Go Dave! Perhaps the insurance companies will take note that financially free and fit, with 0 credit scores, could be reduced risks due to the following: 1. Less stressed and distracted drivers as no debt concerns. 2. Potentially more careful drivers as they don't want to spend their money to buy another car due to an accident. 3. In the event of an accident, less costly cars to replace as the purchaser carefully paid cash for the car. 4. Budget conscious gazelles will do all they can to keep their insurance cost low, perhaps even driving more carefully to keep from surcharges. Perhaps the insurance companies will notice that mature (x years of driving experience), 0 FICO, debt free individuals have a lower risk - possibly even in the ultra-fit, low risk, low cost pool... ;^)

Gerry June 19 2010 6:39 AM

Not all insurance companies are going to jack your premium up because of your score. If yours does, it's called "dropping them and getting another company." There are plenty of insurance companies out there. You have a lot of options. Shop around. My insurance company (Webb Pickard/Safeco) doesn't base my rate on my credit score. I know this because I referred them to my brother (who has no credit) and he isn't paying too much more than I am. Cell phones are easy. Either keep the same company until you have to change because of a move. Or pay-as-you-go. Or just pay the deposit. How often do people really change their cell phone company? And if you're determined enough, your score won't matter much in the job market either. In the long run, not having credit outweighs the "benefit" of keeping up your FICO Score. And what's wrong with keeping the accounts open and simply not using them? That doesn't have as much of an effect on your credit score as closing the accounts completely, if you're that worried about it. You can check your FICO score at many places, not just myFico.com. You can also check it at Equifax.com, which is one used most often anyway.

Krystal June 18 2010 10:57 PM

I always enjoy these comments. I have worked in banking for 30 yrs. Cash is King as Dave says, I presently work for one of the country's largest banks and we do people every day without scores, based on other stability factors. As for Fico's I refinanced my mortgage in 2001 (prior to doing Total Money Make Over) had a low score due to medical issues and I found a local bank that did what Dave said. They didn't look at my score, they looked at me as a person. I had equity, job stability, a very low score and even some slow pay credit then. I asked for a product that wasn't sold in the market, and went on a 15 yr loan and got a great rate. We are almost totally debt free and owe 69 payments on our home. We live in an older home, had to replace roofs/doors/windows. We buy on sale, pay cash and negotiate EVERYTHING. With the economy the way it is right now there are tons of deals from merchandise to labor discounts. Also on insurance, as other comments stated if you have a lower fico and pay a little higher it is still cheaper than a car payment. I pay high insurance not because of my Fico but because I have a 20 yr old with a not so great driving record. He doesn't use cc and we have taught him to pay cash/use debit for everything. He is on his way to saving, and learning to pay cash for everything. I am excited that he will not have to learn the hard way as I did when I was younger. Thanks Dave for helping us all "see the light". Cyndie/Woodstock

Cyndie/Woodstock June 18 2010 10:47 AM

One way around the $500 deposit for cellphone use is to buy a pay-as-you-go phone from Virgin Mobile, Boost, etc., and pay as you go. Some of these companies are the same that runs the regular cellular service. There are even smartphones available with pay-as-you-go plans, so you can check email, the web, etc. There is no need for a $500 deposit.

Sue June 17 2010 11:31 PM

I've read quite a few comments and some of them touched on this... I was denied employment simply because of a not-so-good credit score. Though it may not have any bearing on some of the things you do, and you can navigate around some of those things that may require it. Being denied employment simply because you made a few financial errors in the past, is a very spirit breaking experience. I aced the interview, was given the job, but had to wait for the background check. And the results are: Sorry, we cannot hire you because of negative reporting in your credit history. How do you navigate that while you remain unemployed?

Hugh June 17 2010 4:23 PM

We have dumped all of our debt but our mortgage ($25,000+ woo hoo!) and closed all of our credit cards and other lines of credit. Doing this immediately crashed our FICO score, not a big deal as we're buying everything with cash. The one problem we've encountered is renting a car. All of the big rental companies require a CREDIT card, not a debit card, in order to rent a car. It doesn't matter if we pay cash for the rental time AND the deposit, they won't let us rent the car without the actual credit card. Does the DR team have a suggestion on how to work around this? We really don't want to have to get a credit card just to rent a van for a family vacation. Thank you in advance!

Lynn Goehring June 17 2010 11:40 AM

Major employer (subject to certain requirements of federal labor laws) are required NOT to use credit as a sole factor in determining whether to hire someone or not. Use of a credit report MUST be tied specifically to the job they are applying for. In other words, even running the credit report, much less using it as a hiring decision, has to be specifically job related. Otherwise, the hiring practice is not recommended. There are very specific rules in FCRA that specifically address this issue. Ask your employer why a credit report is being sought. Make sure it is truly job related. If not, or if they cannot explain it clearly to you in a way you can understand, then you don't want to work for them anyway! If it truly is job related (you are an accountant responsible for reconciling the bank account for example), then explain your choice of not assuming new debt and what that impact might be to your credit report. Be sure you know what is in your report already and offer to provide them with a current copy.... shows how knowledgeable you are and that you are very aware of this concern.

Sherri June 17 2010 10:52 AM

We have celebrated 6 years of being DEBT-FREE!! I cannot believe how many people believe they "need" a credit card or some kind of debt in order to establish their credit. When I talk to people about paying off all of their debt and living on cash and debit cards, they act as if I'm telling them to euthanize a dearly loved pet! I have a friend who is financially fit in all other areas except the credit card myths. She and her husband believe that debit cards are higher risk because they are connected to their checking account. They also get "great rates" on their checking account which make using cash not as wise as using a credit card....go figure. They "pay the card off every month" and get brownie points to use at R.E.I. once a year. I guess. I figure if I wanted stuff from R.E.I. or anywhere else, why not just go in and buy what I want and pay cash and be done with it and not have to buy X-amount on my credit card to do so. But that's just me! As for my home insurance- I live in a Flood Plain, so in addition to the $200 per year I pay for homeowners, I pay $100+ a MONTH for flood insurance. No matter how high our credit score could be, it cannot erase the rates we pay for a house which has been involved in 10 catastrophic flood incidents! I also called our utility company to ensure we were not being hammered for having a low credit score- MayBelle assured me that everyone pays the same rate. Our house is all-electric and I have 3 kids who love 30 minute hot showers!

Sharyn June 17 2010 10:25 AM

I keep hearing talk about cell phones. Anyone hear of pre-paid? There are no requirements. As for those of you that pay off your card at the end of every month, we thought we were resposible, everything went on the card and we paid it off every month without fail until the month came when the payroll didnt come in, out of the blue, NO PAYROLL, this was before DR, so no savings either. How do you pay a card off with no income. it happens. we have been on all cash and debit card now for 2 years and we own a small business, I never have to worry about that bill coming in again and not being able to pay it. If you can put it on a credit card you can put it on debit card and you dont have the stress to go along with it. If a customer wants a service done that requires an expensive piece of equipment, they pay up front for the material so we dont get stuck with someone backing out after we've purchased materials. Credit scores are for those that dont plan on changing their behavior. I'd rather pay a higher insurance premium than pay interest to a bank to have a FICO score. Whats the difference?

Suree June 17 2010 7:46 AM

I noticed some were worried about a mortgage, insurance, job, etc. I just re-financed my home two months ago and got 4.625 on 15 year term. My wife and I have had no consumer debt, just our home mortgage for over 4 years now and our credit score is still at the highest level. We pay our mortgage on time and early in most cases and all our utilities early. We have very low insurance rates with our current insurance but have checked every time it is up for renewal and noticed that other companies are higher. I have never had an issue with getting a job either. I am not worried, I have people come up to me and say, don't you need to buy a car, I say sure from time to time but I save up and pay cash for it as I have my last two cars. It is amazing how much extra money you can stash away when you are free from consumer debt. We pay all our monthly bills at the begining of each month wether or not they are due, transfer money into savings including car replacement, household repairs, etc and live off cash categories for the rest, when it is gone, it is gone. We have had months where the food and gas money outlast the month and others where we live off bean and rice and fumes to get to the last day of the month. It is all in the choices we made early in the month.

Eddie June 17 2010 6:31 AM

Its funny how so many people sound like "broke brother/sister in laws with an opinion", i would rather follow someone who has been successful because they've done it then those still trying to figure out why they're not where Dave is. Should i pay a minimal amount more for insurance or should i ultimately pay the same amount or more in interest, not to mention enslave myself..hmmm, i like the former. Why enslave yourself for a "How good of a slave you are" score. Benjamin Franklin said: "Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety." This applies to slaves to debt as well. Don't play a game where the people who created the FICO game created it in such a way where they will make millions off your interest. Play the game where you control the terms and conditions. The key word in Debt free is FREE!!! If you follow Dave's plan, you won't have to worry too much about paying a bit more because you've learned to adjust your budget and live within your means. So its more about being FREE!!!

Cedric June 17 2010 2:25 AM

I got rid of all my credit cards, and I was debt free, and feeling good, until I had a problem with a purchase. Then I realized that I needed the protection of a credit card, so I now have one--but just one.

George Butel June 17 2010 1:00 AM

I just want to say that it isn't fair to just judge on your credit or score. We have good jobs and no debt now and our credit is fair and we still can't get a home. we have never been late on your car payment or rent for 8 yrs +. They told us fix up your credit more and reapply in a year. Its very stressful.

tina June 16 2010 11:58 PM

My wife and I went to get pre-approved for a home loan yesterday only to find out she didn't have a credit score any more. We worked the FPU plan and have been debt free for almost 1 1/2 years. Fortunately they did some extra underwriting for her as Dave said they would and were able to get us approved. I was surprised to see my debt score was an 800 considering the lack of credit over the last 18 months. Thanks Dave for helping my family reach a point where we can own a house (as compared to the house owning us). God bless you and your team.

Patrick Schumacher June 16 2010 11:32 PM

Having a high credit score is not an indicator of character and I wish employers would stop using it. I worked in banking for many years and I recall four such perfect score employees that stole from customer accounts to pay for a new home , one stole from traveler's cheques locked in the vault and caught after she transferred out, another stole from international wires and the last one doctored up paperwork for people to get mortgages and loans and got a kickback. All, all had perfect credit. Employers need to stop using it to violate folks privacy and then using it and not the person's work experience to get a job. If a person get foreclosed on because a family member loses a job why should they then lose a job opportunity or promotion because of it? This happened to a nice lady who applied for the TSA;her $300k home went into foreclosure and they told her she couldn't get a job patting people down smelling their feet and checking luggage. How ridiculous but true.$7500+ more bad debt get you no job.

Cydney June 16 2010 11:15 PM

In my experience, my credit score has never affected my insurance rates or my ability to get utility services. I got my first credit card when I turned 18 very shortly before I got my first cell phone - no deposit needed, even with a 2 month credit history with a $200 limit. Shortly after, I hooked up utilities in my college apartment with no problem. I've been going through State Farm since I got my first car at age 20 (strict parents) and have paid less and less over the years even though my score has fluctuated about 100 points from fair to excellent to good to fair and back up again. I have never had bad credit at any point but even at my lower points, I have still been hired and have never needed to put a deposit down for anything. I recall employers checking my credit but never utility companies. If you are following Dave's plan, I would hope you would have the extra money to put down a deposit, especially if it has been long enough for you to no longer have a FICO score. As far as employers go, I think they are more interested in the history than the score and I would hope they care more about your other qualifications.

Amber June 16 2010 11:05 PM

with your car paid off you should be able to make a higher insurance rate how much higher is it from high score to no score

Therman Ray June 16 2010 9:32 PM

Come on DAVE, you have mostly questions here about Insurance premiums. WHAT SAY YOU??? Do you have a list of Auto & Home insurers that do not use the unworthy FICO score?

Craig June 16 2010 7:31 PM

An ability to generate income is more important than "employment". My credit score probably looks like my shoe size due to losing my ability to generate income but that is not accounted for. I couldn't obtain credit if i wanted to now. I think FICO should be eliminated but that would be too much work for most companies. Dave's way of viewing finances is going to be mandatory in the near future anyway so why NOT embrace his teachings???

Patrick June 16 2010 5:19 PM

I have heard/ read many who believe your insurance will be partially based on your FICO score. Yes, it is true. My own car insurance just went up almost 10% for my next renewal (Florida insurance is really high) almost $60. However, my neighbor's pay more than that in their interest for their mortgage EACH MONTH! Sorry, I'm ok with paying a bit more on insurance because I'm debt free.

Michelle June 16 2010 5:10 PM

Yes, you can get a job without a FICO score or a credit report check. Why would you want to work for a company who only rates how much debt you have and whether you repay it, instead of your skills and personal relationship? Yes, it will take more time to find a job. As for insurance, you again shop and see what you can get. Dave has admitted on the air that many insurance companies DO use a FICO score. However, there are insurance companies who will give you a better price based on your affiliations, including but not limited to whether or not you have 2 or more forms of insurance with the company, the schools you've attended, the trade associations to which you belong, etc. You can also check with Zander Insurance. We get our insurance through MetLife and Liberty Mutual. We do not pay an exaggerated rate because of our FICO score. I'm sorry, but what I hear in this column is that rather than following a plan of a guy for whom this worked, you would rather not only cling to your credit cards like security blankets, but use excuses and malign the man in the process! I don't understand why, instead of whining about what might happen, those who whine instead get off their duffers and at least *attempt* to see it doesn't happen. They might be surprised at what they can accomplish without FICO.

Lori T. June 16 2010 4:55 PM

Dave, I'm not going to argue the statement that "All it tells you is whether you are good at borrowing money and paying it back." BUT I work in real estate everyday and in the last 6 months have had people (2 of them had 20% down) but because they had not established enough "history" with there FICO / Credit score, were not able to get loans. Say what you want but banks set the rules to the lending game and unless you plan on buying a home cash, I would suggest to anyone to do something to establish credit. Like putting a few of the fixed bills on a card then paying it off each month, something simple like that. I'm afraid "the FICO" is a necessary evil if you plan on buying a home. Bryan

Bryan June 16 2010 4:19 PM

We are now debt free except for our home. We are working on our savings and then will begin our investing work... until then, I have found higher insurance rates because our credit scores aren't high. Any suggestions?

Dee June 16 2010 4:06 PM

Many insurance companies look at your credit score to determine how much your rate will be on your auto and insurance rates. Our only debt is our mortgage. We do have a great score but what happens when our mortgage is paid off and we are totally debt free. Our credit score will be lower and then our auto insurance rates go up? I am confused???

kathy June 16 2010 3:41 PM

Someone should create the FRS - Financially Responsibility Score. Employers and Insurance Companies need another option. There needs to be a tool to look at employment history, NET WORTH (duh), income, etc. We are debt free except the house, getting ready to refinance to a 10 year mortgage and we found out our score is dropping like crazy. Good thing this is the last time I will ever sign on the dotted line! Can't wait to be done with slavery!

Melinda June 16 2010 3:23 PM

First off employers use your credit REPORT not your FICO score. they use it to help determine how trust worthy you are. If you have a lot of debt, or behind on all your payments they will know you are a risk. The report shows them this history not yoru score. Most people confuse the two when they are talking about them, or they listen to their stupid friends that love debt.

Tim June 16 2010 3:11 PM

I wonder how easy getting a new job is when you have no credit score. Had my wife had a low or bad credit score she wouldn't have gotten her job with a well known bank in the South East. I wonder, as, some have said, how would one get good insurance rates with little or no credit score. Don't get me wrong but have a lot of money doesn't automatically grant you access to all the best treatment. I guess when you have Dave's money Insurance rates don't matter. Look I agree with Dave about 90% of what he talks about, but we live in a world that revolves around credit and credit scores. I don't believe or advocate putting everything on a credit but having a revolving credit card to keep your credit score up is not a bad idea. My credit score is extremely high because I have paid off all but one CC and my new mortgage rates for my new house is 4.75. I am glad I have a good credit score. Again when you have as much money as Dave has then you insurance premiums don't really matter, and paying huge deposits for cell phones or other things don't matter. Heck Dave could quit his job today and never have to work again, so finding a new "good" job with no credit score isn't something he has to worry about. I think have no dept is great but having no credit score isn't what it was when Dave made all his money. I have very little dept in the shape of a small CC and my car payment that I never missed a payment and hope I will never, but I will also not buy anything expensive on a CC again if I can help it. I am about to buy a house and have saved about 75 percent of the money I need to buy appliances and I am thrilled, I have a few more days before I close and a month left in my apartment so I have plenty of time to finish saving. I believe taking care of your credit is crucial to living in our society. Again Dave thank you for the drive to pay off my high cc bills but I have to disagree with you on this point, after talking to several professionals in Finance, they agree with no debt but not with no credit score.

Steven June 16 2010 2:40 PM

People have raised some good points. Dave is correct when he says that your FICO score isn't an indicator of your financial success. In fact, my highest FICO score to date was when I was in college and had zero income and net worth! While I appreciate Dave's candid advice on the radio and TV shows and the fact he follows the principles he preaches, I think most of us find ourselves fighting an upstream battle without a credit score. I have listened to enough of Dave's shows, and he has given an opinion on all of the questions posed here. For those who use credit cards for convenience and pay in full - I happen to be in this category - Dave's advice would be instead to use a debit card for online purchases, car rentals, and hotels. The issue here is that the last two often put authorization holds against cards equal to the amount of the stay or car rental, and not everyone has that level of margin in their checking account. Credit cards, on the other hand, are set up to deal with this. It will just deduct from your available credit line whereas with a debit card it would be deducted from your available balance, even if no charge goes through! For employment purposes, I would say almost all employers who do a credit check are only looking for negative items. If you have no history or past history that is positive, it will have no bearing on employment. I work with a lot of foreigners on visas, and I know none of them had a credit score when they came to the US yet it didn't seem to affect their employment status. For car insurance, I believe Tennessee is one of the states that bars insurance agencies from using credit scores at underwriting to determine insurance premiums. Most states are not like that, however, and a lack of credit history would likely have some impact on one's auto insurance rates. More and more states are banning this practice, however. The final question is what do you do about all of these places utilities, cell phone companies, apartments, etc that run a credit check? For the utilities, Dave's advice on the radio show has been that we just need to be willing to pay a little more in deposits for awhile until we get established with the company. For some things like a power bill, the deposit might not be too bad, but some cell phone companies charge upwards of $400. Not everyone can afford to have $1000 or so as deposit float during this time period. For apartment complexes that only base on a FICO score, Dave said he'd refuse to do business with them. However, outside of college towns, every single complex where I've been has done a credit check and won't rent if you don't have a credit history. I doubt, however, most Americans are in the situation of Dave where a FICO score can't be calculated. Most of us have had something reported to the bureaus at one point or another, and many of you are on 15-year mortgages. As long as you're paying on time, you'll have a high FICO score even if you have no other debt. Finally, once you pay off the house, items can remain on your report for years after the debt has been paid in full/zero balance. This will continue to have a positive influence on your FICO score even if you currently don't have any debt. In addition, some utility companies do report to the credit bureaus as 30-day accounts, so even if you have no loans, credit cards, mortgages, car notes, etc, something is still being reported.

Brian Watson June 16 2010 1:40 PM

System Beater shows his financial immaturity by trying to "win" using a credit card. The better method is to save and have an emergency fund, that way you don't need to spend all your time and energy trying to outsmart the banks. Sooner (or much sooner), he will realize that debt (and borrowing) always has a cost!

Dave Dorey June 16 2010 1:07 PM

Dave, another benefit to paying off the mortgage is hitting the threshold when the homeowner can escrow their own property taxes and pay in one lump sum at the end (or beginning) of the year. The homeowner earns interest on those funds rather than the mortgage company. Plus, when the homeowner writes a big fat check to the taxing entities, it tends to make the taxpayer want to be more involved in keeping track of who their elected officials are and where they are spending taxpayer money.

Don Stroud June 16 2010 12:39 PM

In general, I agree with you. However, what about insurance companies and potential employers who use FICO to make decisions? Can you direct us toward highly-rated insurance companies that will look past the score? What do you tell a potential employer who wants to look at your credit report? Don't get me wrong, I think it's ridiculous how powerful this score has become. We just want to know how to live with it, until industry begins to see things your way. Thanks!

C Lawton June 16 2010 12:34 PM

i keep seeing several postings about employers looking at FICO scores... maybe don't work at a place that bases your worth on .. well your worth. what does a FICO score reflect on job performance? and how is that any employers business any way!

amanda June 16 2010 12:23 PM

Ok so how do we as "we the people" go about changing this issue with the insurance rates and job opportunities? FICO scores should not be used.. Thanks Dave we love ya!!

April June 16 2010 12:09 PM

How timely is this article. I have been following the debt snowball and wanted to refinance my current mortgage from a 6.62%/30yr fixed to a 4.50/15 yr fixed to pay off my house sooner at a cheaper cost. As I paid off some debt, my score went from 698 to 675. I wondered how I was going backwards as the favorable rates were at the 700 and above level. Well - I found out that the debt paid off also took the history from that account - making my overall history less favorable than it was the previous month. How could I go down in score when my debt is going down is what I tried to figure out. The person at the FICO office explained this counter-intuitive principle and all I could do was shake my head. I remain focused on zero debt and will not worry about my credit score.

Curtis June 16 2010 12:09 PM

"But what about insurance?" "What about employers?" "What about interest rates?" To hell with them. If you're reading Dave Ramsey, you already have a credit score. Get your act together and keep it together, get OUT of debt, your score improves, and you win. With no debt, you're not wasting any money at all on interest. With a short-term mortgage, you're paying less interest overall. With a reasonably priced car that you own outright, you don't need the same level of insurance that a bank requires. Buy insurance for liability, and pay for damage you did yourself from your own pocket. As for employers, you *did* get your act together, right?

Bob K June 16 2010 12:01 PM

Thanks for mentioning the requirements needed for manual underwriting of a mgt. I have always told my daughter this was available, but didn't know of these requirements. She has no debt and is an RN, but couldn't even obtain a DISH Network hook-up because she has no score. I like the comment from the Mich. lawmaker. More should be done and common sense used. Why should people who are financially responsible be penalized and forced to pay more for the same service?

Trudy S. June 16 2010 11:58 AM

I think this article was accurate via 5+ yrs ago. Most companies won't hire without proof of credit - I guess it shows responsibility? Every time I shop around for insurance companies are pulling my credit & basing the rate off of that... makes no sense since I have to have insurance - mortage company won't let me skip on homeowners & the State won't let me skip out on auto. As I pay down debt & my score goes up my insurance rates are going down - so far by about $800 annually. Ins agent recommended that when I get debt free this fall (getting a windfall that will knock out 90% of non-house debt) to use one card for gas & just pay it off every month with my other bills. I dunno... the world is going in the wrong direction anymore. Responsibility is punished rather then rewarded.

Sam June 16 2010 11:34 AM

I am living debt free (evey mortgage paid off) but I am single and on a fairly tight budget. I have to keep a good credit score -- it affects the cost of my auto insurance and my homeowners insurance. I really don't want to pay the insurance companies one penny more than I have to. Any solutions around this??

Sue June 16 2010 11:23 AM

Hi Dave, definitely this has been the smartest thing I have heard all week, in fact for the past 9 years living in this country. I do have a concern about your credit score affecting the chances to get a job. I work as a job search coach for executive expatriates' spouses, and I get this question a lot- The myth or reality that credit score does have an effect in getting a job. If anybody can give some more info about this matter I will appreciate it. Thanks, keep up the good work. God bless America. Federico. fparola@diversityintel.com

Federico Parola June 16 2010 11:21 AM

@Andrew: Dave recommends to get "at most" a 15-year conventional loan. I'm pretty sure he would be all for you getting a 10-year loan with a lower rate as long as you can meet the "general rule" of 25%. Heck, if you could get a 5-year note, even better. But at that point you might as well save up the money and pay in cash.

Gary Thomas June 16 2010 11:13 AM

There are a lot of comments on here about needing a credit score to get a job and get good insurance rates. I'm here to tell you that my husband's and my insurance rates are quite low, and our credit scores have never even been brought up. This includes the application process and having our rates lowered by our car insurance company after a certain length of time without an accident. Our health insurance is now through my employer, but we have previously purchased our own coverage with no concern about our credit score. The number of jobs that require a good credit score for hire may be on the rise, but many times you can discuss your debt-free lifestyle with your potential employer when they want to check your score and tell them why you won't have a credit score. I just got a job in December with no mention whatsoever of my credit score. I know of many people who have been able to rent apartments (nice ones, too) with bad credit, and many other people who have been hired without consideration of their credit score. Thanks, but I think I'll continue to live debt-free and pay myself instead of creditors.

Katie June 16 2010 11:08 AM

While I agree with you, it is a sad fact that the FICO score deals with much more than just your borrowing and debt. Insurance premiums are affected by it, power companies use it when you are signing on, phone companies use it when you sign on, I have even had job prospects check it!!!!! Unfortunately it is a fact of life for those of us that are NOT multimillionaires like you Dave, that we must at least keep the score active. I do so by using my CC's but ONLY if I have the cash money put back before hand for the purchase. DEBT I do not have!!!!

Teresa June 16 2010 11:08 AM

I wonder what our Congress' FICO score is? Certainly not "indeterminable", perhaps "intolerable"?

Mark E.Galloway June 16 2010 11:08 AM

Makes you wonder how those insurance companies and employers did it before FICO scores existed? Seems to me we need to go back to the 'old fashioned' way of hiring and insuring.

Tracy June 16 2010 11:04 AM

I work in personal insurance - your credit score "feeds into" your insurance score which impacts your premium. I have decided to keep and use my oldest card occassionaly (monthly) and pay immediately to keep a higher score and lower insurance premiums, etc.

Indy June 16 2010 10:59 AM

Due to employer & insurance reviews of our FICO's we have decided to keep our 2 credit cards open. We ONLY use them for our recurring utility bills. The cards are left at home...no chance they will be used on impulse....and we pay them off, in FULL every month. Payment in full is no problem since our utilities are already budgeted for in advance. This keeps the cards active and our FICO score high, lowering our insurance costs considerably (literally hundreds of dollars a year) and keeps our employers happy. Note: Why do insurers and employers care about your FICO? It is one indicator of your responsability and desperation levels. In a perfect world we would not have to play such games but until then we will "churn" our 2 credit cards. For us its a win-win....no impluse buying and in our minds we don't even have cards because we never use them. The utilities are automatically charged. We just pay the bill like we were paying the electric company. Hope this helps. Good luck.

T. Word June 16 2010 10:58 AM

I agree with Dave - the FICO Score is a way to keep consumers slaves to debt. I do have one question, along with many others, how will this affect insurance rates? The only way I can think of to get aroung this is not to buy a brand new car but to purchase good used vehicles. Insurance rates are usually lower on older vehicles. I would like to know Dave's comments on this.

Estella June 16 2010 10:48 AM

Thank you. This was an educational article.

Bob W June 16 2010 10:47 AM

the problem is that SO MANY things are based on credit history and scores... your CAR insurance for goodness sakes, is based on this... so how do you keep and get lower rates when you have no score?

Kathy June 16 2010 10:45 AM

My son, 19, went to get a cell phone but they told him he did not have any credit, so he would have to put down $500.00. Is there any way around this?

Michelle W June 16 2010 10:33 AM

thanks for the breakdown. Never knew exactly how it was figured. See you in NC in October. DEBT FREE!!

Floyd Pearce June 16 2010 10:17 AM

Dave always talks about the 15-year fixed-rate mortgage. Is there any reason not to get a 10-year fixed-rate conventional mortgage if you monthly payment won't exceed 25% of your take home pay and you can get a lower interest rate?

Andrew Beckham June 16 2010 10:17 AM

I did get a mortgage without any debt or credit history. Sadly, because of it, I didn't qualify for the government backed, below market rate mortgage for low income first time home buyers, Sonny Mae. The advice from ALL the banks and mortgage companies to me was to acquire at least $15,000 debt and come back in a year. It burns me up that I got a mortgage for a rate several points higher, but at least I got one.

Susan June 16 2010 10:17 AM

Great post Dave, With any luck more and more Americans will begin to realize the value of your program. I know it has made a considerable difference in my life. So much in fact that I intend to take these principles to the Michigan State government as a new State Representative. We will see if the voters share our sense of fiscal responsibility. J. Longtain

J. Longtain June 16 2010 10:13 AM

This concept recently occurred to me that if I am not going to be using credit, I will not need a credit score. However, aren't car insurance companies beginning to look at your credit score and using that to determine your rates? Aren't employers also beginning to look at credit scores when hiring?

amy yoste June 16 2010 10:11 AM

This would make sense if it was just new debt that the FICO score drove, but it is your insurance costs and, increasingly, your employability.

P. Collins June 16 2010 10:03 AM

The only downside to not having a credit score is that insurance companies base the rates they give you partially on your credit score. If you don't have one, you'll get a higher rate. I've never heard Dave address this issue, and I'm curious to hear his thoughts on the matter.

mason June 16 2010 9:54 AM

Loved this letter! I kept trying to figure out how to explain all of this to people and coworkers while I worked at a bank, and now I can finally tell them with this letter!

Pauline June 16 2010 9:35 AM

Hi Dave, I recently finished your FPU class at a local church. I have a long way to go, but the important thing is that I have finally started. I understand your opinion on the FICO score, but until I get to the point where I can meet the criteria for manual underwriting (a long way off), I am going to need a decent credit score. I lost my job in January, so my work history alone isn't going to be great for awhile since I am starting over at 59. I hope I don't have to give up my fream of ownibg my own place someday. Regards, Kathy Plante

Kathy Plante June 16 2010 9:30 AM

Oh, I love this article! I work in financial advice and hear so many people talk about their credit scores! Drives me crazy! When I point out reasons why it is not so important and a better way to manage their money, they are in awe and act like its some revelation! Haha! Thanks Dave for keeping our heads on straight! Im 27 and started your plan 2 years ago. 17,000 truck loan and 130,000 mortgage left and then I will have my own financial freedom!

Derek June 16 2010 9:27 AM

Even though your FICO score isn't necessarily an accurate measure of your financial responsibility, that's still the way it's used in the real world. For example, potential employers often check applicants' FICO scores when considering them for job openings. Shouldn't this be taken into consideration when determining the value of a high FICO score?

Logan June 16 2010 9:21 AM

Dave: We've been debt free (except our mortgage) for about 16 months now and we just finished our 3-month emergency fund last month! We're so thnkful we came across your program! Do you have any advice for avoiding the semi-annual increases to our insurance premiums based on our falling FICO? I agree that it's better to pay them the few extra bucks than to borrow money just to maintain a FICO. But if there is a trick to avoiding the increases, then please share.

Jon Henry June 16 2010 9:18 AM

What I do - have a rewards card with no annual fees - I pay it off weekly (not monthly, to avoid the amount ever going up; or right after a larger purchase) so there's never any interest or balance, I don't have to worry about cash getting stolen, and I earn rewards (I used that card for business expenses that were reimbursed, and got back over $1500, which went to principle on my mortgage). If the T&C ever change to add a fee, I can drop the card any time. I also had to repair an a/c unit, which I did w/12-month no interest financing (that came in the form of a credit card). I could have afforded to pay the whole thing off, but I let the money make interest instead (I never recommend doing any sort of interest-free extension unless you have the cash and more to cover it).

System Beater June 16 2010 9:16 AM

I agree with Dave, and have been abundantly Blessed by his ministry. Unfortunately, we live in a society that loves our I love debt score more than we do. Now-a-days, employers, insurance companies, rental companies, to name a few, depend on this # when giving good rates and quotes.

Mocha June 16 2010 9:15 AM

How do I inquire on the free credit score?

Tammie Thelen June 16 2010 9:02 AM

I fully agree with your comments regarding FICO. A question: When manual underwriting is used will your interest rate still be subject to being bumped up because no FICO exists? I know this is common practice in standard U/W interest rates are predicated on your score. Thanks. Bill

bill turck June 16 2010 8:58 AM

The Insurance companies are raising car insurance after checking credit scores. My Daughter's ins. raised by $100. She has no debt. How can they legally do this? This is Farm Bureau.

Mary June 16 2010 8:56 AM

It is unfair that as my credit score decreases, my car insurance rates increase. It is also unfair that some employers are using credit scores to help make hiring decisions.

Orion A June 16 2010 8:44 AM

Awesome article! I shared the link with my readers. Ashley

Ashley June 16 2010 8:43 AM

One of the issues is with Insurance. In the state I live in, and others, use a credit score to determine rates. It can save you significant amount of cost for your Homeowners and Auto insurance. I believe there is a difference between debt and credit. Credit can be good, debt is almost always not good. Thanks for all you do, Dave

Duane June 16 2010 8:42 AM

I truely believe in everything in this article. But, i can not convince my boss of that. His wife is in mortage & he believes that you have to have a credit score & debt.

david June 16 2010 8:40 AM

yes this so true but allso if you have a bad credit score it will hurt you in looking for a job as i have 20 plus years Experince in the C-Store Buissness & a Subawy francise but i had borowed money have had a job interview with Pilot Travel centers thay will not hire because of bad credit.no job offers as i refuse to not borrow money.so true debt is dumb thanks troy from sebring Florida

Troy Thompson June 16 2010 8:34 AM

And also like it or not, you cannot get hired by most major US corporations without a good credit score. How do you suggest your followers handle that? My brother could not get a job for this reason. Then one company wrote his social security number down incorrectly. After he was already hired, they Finally got it corrected. By then, they liked him & decided to keep him. Your thoughts on this would be appreciated. I know it is a problem for many Job seekers. Thank you, Terry Clark

Terry Clark June 16 2010 8:29 AM

Great post Dave!

Tracy Renee June 16 2010 8:28 AM

Very true Dave! Too bad my generation was not taught these invaluable principles before it was too late. We have been led to believe that our FICO score is an accurate indicator of our character. When in fact if we believed and followed the Scriptures as we should we would never enter into a debt-slave relationship with anyone. Thanks Dave for dispelling this FICO debt myth to our society.

Billy McKee June 16 2010 8:03 AM

How about FICO scores in determining insurance risk or job applications. My auto insurance was very interested in credit scores before they would give me a rate. I have also heard that employment opportunities can be determined by FICO scores. Can you comment on those issues. Thank you

Dave June 16 2010 8:00 AM

what about because of the way we live and we are rural, we use a credit card and shop on-line to find better prices and better products with free shipping, etc. we have to shop locally to use cash or am i missing something? We do, 100%, pay the card in full monthly even if we have to take it out of savings in a pinch, but then replace the savings immediately. how do we get around long distance purchases with your cash system???

maggie nicol June 16 2010 8:00 AM

This is one area where I don't agree with Dave. I do not have a goal of having no credit score. I work in an industry where they screen resumes based on the score. I don't feel like paying a premium for my home and car insurance because my credit score is factored in. I am not willing to pay large deposits for new cell phone service because of a non-existant score. Even though mortgages are available, the thing they don't tell you is that a lot of places base the rate you get charged on the score. Can you live without a score? Sure? But for *me* it's not worth the extra hassle and cost. I will continue to carry a credit card which I pay in full. Love you, Dave, but on this one, I don't think this is universally good advice.

Peggy E. June 16 2010 7:45 AM

A credit score wouldn't be important IF all you needed it for was credit but the truth is your credit score affects you in the real world in many ways. My auto insurance premiums are related to how good my FICO scores are and some employers are also using it for screening future employees. This article doesn't show the complete picture and is therefore misleading. It also never mentions there is only ONE source for your FICO scores and that's http://www.myFICO.com, which you have to pay for and can only get two of your three FICO scores now.

Bob Mulholland June 16 2010 7:44 AM

The insurance companies do use your scores to determine rates for car and home insurance.

Sylvia Wagner June 16 2010 7:42 AM

Dave, I agree to a point, however like it or not, a lot of things are tied to your FICO score, like your insurance rates. WIth a good score you will pay lower rates. Period! And trust me, I don't agree, but many things are tied to the FICO score and a good score will save you a lot of money over the years.

Greg June 16 2010 7:30 AM

FICO and insurance - auto /home are closely knit. How do you overcome this issue?

Daniel Bandimere June 16 2010 6:37 AM