An American Millionaire

Les and his wife can buy whatever they want with cash, but is he ruining his credit rating by not using it? Dave wonders why Les would think he needs a credit rating when he’s a millionaire.

QUESTION: Les in Los Angeles and his wife have been retired for five years and debt-free for four years. They can buy whatever they want with cash, but is he ruining his credit rating by not using it? Dave wonders why Les would think he needs a credit rating when he’s a millionaire.

ANSWER: Your FICO score is mathematically composed of your interaction with debt only. It’s not an indication that you’ve won with money. You have, Les, done a fabulous job and won with money. Congratulations! You’re an American millionaire. That’s pretty cool. There are only about 10 million of you. It represents a life of being responsible, being intentional, and not spending like you’re in Congress.

I don’t think you need a credit rating. I think you can pay for whatever you want, and I don’t suspect you’re a guy that’s going to jump up and go $500,000 in debt. There’s nothing you want that bad. You’re just listening to the voices of the culture, and you have to remember you are in the top 0.5% of 1% of the culture, so I think they should be listening to your voice. You don’t listen to fat people about an exercise plan; you listen to skinny people. If you want to be a millionaire, you listen to Les.

Get a debit card. It will do anything a credit card will do; it just comes straight out of your checking account. And here’s a note: You have money in your checking account. A debit card has the same protections a credit card has for fraud. But you’re obviously not a big spender—not out of control or any of those kinds of things.

I would suggest that instead of you bending to the cultural influence, the culture should bend to your influence. That’s the answer to your question. No, you’re not shooting yourself in the foot. Your ability to pay cash is a testament to the fact that paying cash works. Since you don’t have any debt, you have money. It’s not the inverse.

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