The Great FICO And Car Insurance

A listener asks how the price of their insurance will be affected if they are debt-free and have no credit score.

QUESTION: A listener asks how the price of their insurance will be affected if they are debt-free and have no credit score.

ANSWER: Your insurance will likely go up, but not nearly as much as you would have paid in interest to some bank just to maintain your credit score. My personal insurance is higher because my credit score is zero. I don’t have a credit score because I don’t borrow money and haven’t in decades.

The credit score is the bane of our existence these days. The stupid FICO score has too much control over our lives, and it’s not even an accurate measure of winning financially. All of the ways you interact with debt equal your FICO score. If you don’t interact with debt, you don’t have a FICO score. It doesn’t take into account that you might have built some wealth.