Why Dave Ramsey Thinks 'Good Credit' Is an Oxymoron

by Christy Bieber | Published on Oct. 2, 2022

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Is Dave Ramsey right about this one?


Key points

  • Dave Ramsey said good credit is an oxymoron.
  • He thinks it's bad to have good credit because your credit score is a measure of your debt.
  • Unfortunately, following Ramsey's advice on this issue may not be wise.

Most people aspire to have a good credit score. But finance expert Dave Ramsey doesn't think that's a smart idea. In fact, Dave Ramsey has described good credit as an "oxymoron," which means he thinks the term is self-contradicting because there is no such thing as “good credit."

So, why is Ramsey at odds with most other financial experts and what underpins his belief that good credit is actually a bad thing? 

Ramsey doesn't believe good credit is a good thing

Ramsey does not believe good credit is actually a good thing for one key reason. "You only get a good score by borrowing money -- a lot," he explained. "You take on a ton of debt and risk, just to get the 'privilege' of going into even more debt. It's a rigged system."

Ramsey suggests you can -- and should -- opt out of this "rigged system" simply by declining to borrow money. 

If you never take out loans or take on credit card debt, you will not earn a good credit score. That's because you do need to have debt in order to show you can use it responsibly and earn a good score, exactly as Ramsey says. You may end up with no credit score at all if you refrain from borrowing, which he believes is fine because you shouldn't want to borrow money anyway. 

Is Ramsey right about this?

The problem is, Ramsey's advice is not practical in the real world for most people and good credit isn't an oxymoron at all. 

Good credit is defined as having a credit score of around 670 to 739, while a score of 740 to 799 is considered to be very good credit, and a score above 800 is considered to be excellent. You can earn this credit rating by borrowing responsibly and paying back debt on time.

While Ramsey believes the borrowing needed to earn a good credit score is a bad thing, that's not necessarily true. In fact, you do not need to pay even $1 in interest to earn good credit. You can use a credit card to buy things you'd need to purchase anyway, get rewards, and pay off your cards in full and you'll both benefit from everyday spending and earn good credit by doing so. 

And once you have earned good credit, it can open up all sorts of doors for you. Ramsey believes you don't really need to open those doors because you shouldn't be borrowing for most things. He even advises paying cash for a car and, ideally, for a house if you can. And he said if you need a mortgage, you can find a lender that will give you one even if you don't have good credit as long as they do traditional underwriting and look at the big picture of your finances.

The problem with paying in full with cash

Paying cash for a house isn't a good move since a mortgage is a low interest debt and you can earn a better return on investment (ROI) by taking out a mortgage and investing your cash elsewhere. And car loans are often necessary to buy a functioning vehicle and, even if they aren't, they can sometimes come with a pretty low rate as well. 

Plus, even if you don't want to borrow at all, which Ramsey says is ideal, you will still need good credit to easily do things like rent an apartment or get affordable insurance.

For all of these reasons, good credit is not an oxymoron and Ramsey's belief that it is could lead you astray. While there are plenty of things to listen to the finance expert about, you should not abandon your efforts to earn a good credit score. Instead, make sure you're doing what you can to earn the type of score that can help you out in your financial life.

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