Dave Ramsey Says a High Credit Score Doesn't Matter. Is He Right?

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KEY POINTS

  • Dave Ramsey is not a fan of borrowing money, and if you're not planning to ever do so, it may not matter what your credit score is.
  • While it's easy to see why he thinks a high credit score doesn't matter, most consumers do borrow money, and can benefit from having one.

Strong credit does matter -- despite what Ramsey says.

Your credit score is probably one of those things you don't pay much attention to until you need to apply for a new credit card or loan. But you're probably aware that the higher your credit score, the more likely you are to get approved for the loan or credit card you're after. Plus, a strong credit score could mean snagging a lower interest rate on that loan or credit card -- and saving yourself some money in the process.

But in a recent tweet, financial expert Dave Ramsey stated that a high credit score doesn't matter. And while he's right about a lot of things, this is one piece of advice where he may be missing the mark.

Why you should aim for a high credit score

There's a reason Ramsey feels that a high credit score isn't important -- he thinks consumers shouldn't be borrowing money in the first place. And if you never need to borrow money, then he's right -- your credit score won't matter.

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But Ramsey's advice isn't really spot-on this time around. The reality is that most consumers do need to borrow money on occasion -- sometimes for major purchases, like a home or car, and sometimes for smaller ones, like a week's worth of groceries when money gets tight. And so the stronger your credit, the less costly your debt will be whenever you need to borrow.

How to raise your credit score

If your credit score could use a boost, there are different ways you can pull that off. First, do your very best to pay all incoming bills on time. Your payment history carries more weight than any other individual factor when calculating your credit score. So the more timely you are, the more your score stands to benefit.

Next, if possible, pay down some existing credit card debt. This may not be possible if you don't have money saved and need every dollar from your paychecks for essentials. But if you're sitting on a recent windfall, like a bonus from your employer, you might manage to at least whittle your balance down. And the lower a balance you have relative to your spending limit across your various credit cards, the more your score might improve.

Finally, check your credit report for errors. Mistakes on credit reports are fairly common, and if there's an error that presents you in a less favorable light as a borrower, getting it fixed could help your credit score rise.

One piece of advice you can ignore

Ramsey insists that a high credit score doesn't matter because, as he puts it, "it's proof that you've borrowed money and paid it back, so that you can borrow more money and pay THAT back." While Ramsey's insistence that consumers should try not to get caught in a cycle of debt is good advice, effectively telling consumers not to mind their credit scores isn't advice that will serve the average person well.

For better or worse, the average consumer is likely to need to borrow money in their lifetime. And because of that, a high credit score does matter -- and it's worth working for.

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