Is Dave Ramsey Wrong? With No Loans and No Credit Cards, I Still Have a Credit Score.

by Joe Plemon on August 3, 2011

When Janice and I became gazelle intense about getting out of debt, we did so hook, line and sinker. Once we paid our credit cards off, we either quit using them or cancelled them. Over the years, I have sporadically checked my credit report, but had never become curious enough to obtain my official credit score.

However, because I have often heard Dave Ramsey touting his zero FICO score, and because it has been several years since I have used any credit of any kind, my curiosity finally got the best of me. I, of course, took Dave’s claim with a grain of salt. After all, isn’t the minimum FICO score anyone can get something like 300? Still, I began to wonder: is my lack of any active credit hurting my score? If so, how much?

First: My Credit Report

Before giving you the details of my credit report, allow me to make a recommendation for those of you who will be checking your own credit reports: Save it as a pdf file. This is much easier to navigate than the multi-page printout I made last time. If, after you save the pdf file, you still want a printout, go for it.

So — here is the credit report info:

  • I have a credit history of 21 years and 9 months.
  • I have a total of one open account.
  • My most recent activity for that account is 01/2005.
  • I have a closed mortgage account because I made my last payment on 08/2004.
  • I also have 8 revolving accounts which are all “Paid and Closed", some with the comment “account closed due to inactivity."

Now: My Credit Score

With only one open line of credit, and zero activity in six years and eight months, what is my credit score?

Drum roll please: 801.

But wait! This isn’t a FICO score. It is something called a VantageScore Report (from Experian). “What is going on?" Evidently, both Experian and Transunion are now issuing VantageScores instead of FICO scores. Who knew? Well, actually, anyone who has recently checked his credit score.

What does VantageScore of 801 mean?

According to the report that was included with the score, I am rated a “B". My credit category is Prime Plus (but not Super Prime) and I rank higher than 61.64% of U. S. consumers. I could, according to this report, improve my score by having “more open, recently reported accounts as part of my credit history." In addition, “having open, recently reported bankcard accounts as part of my credit history can have a positive impact on my credit score."

How does VantageScore compare with FICO?

This is a very pertinent question because (according to my understanding), Experian gives consumers the VantageScore number while giving potential lenders the FICO number. Not that I plan to borrow any money, but wouldn’t it be nice for consumers to see the same number that the lender is looking at? Because the top VantageScore is 990 while the top FICO is 850, I suppose I could estimate my FICO score by taking 86% (850/990) of my 801 score, which would give me a pro-rated FICO score of 688. For sake of comparison, I tried the FICO Score Estimator from BankRate.com. After answering 10 simple questions, I learned that my estimated FICO score is 725 – 775. Hmmm.

Am I going to work toward improving my score?

Naw. To do so would mean either borrowing money or using a credit card, and I am just too content (and hard headed) to change how I do things. My wife and I love our cash envelope system; we don’t like credit cards (although we each have a debit card) and we disdain debt of any kind, so we will keep on doing what we have been doing. I know: my credit score could eventually cause a hike in my auto insurance premiums, but I have been monitoring those rates for some time and have seen no obvious jumps.

By the way, I would like to point out to my credit card user friends that I never said a single word in this post which remotely implies that I think you should do anything differently. Personal finance is personal, and if you do well by using your credit cards, I applaud you.

They just aren’t for me.

Readers: how often do you check your credit report? Your credit score?

 

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