So you’ve heard Dave Ramsey say that credit scores are only important for those who want to dig themselves into debt. Is that true? We disagree.
Maintaining a high credit score is important for many reasons, even if you have no immediate plans to use debt. Your credit score is a reflection of your creditworthiness, i.e., how likely you are to pay back any debt you may take on. Higher credit scores indicate that you are a responsible borrower and are more likely to be approved for credit when you need it.
Here are some reasons why it is important to keep a high credit score, even if you have no plans to use debt:
- Access to financial products: A good credit score can open up opportunities to access financial products such as credit cards (with sign-up bonuses), personal loans, and mortgages. Even if you don’t plan on using debt, having access to these products can provide you with additional financial flexibility in the future.
- Lower interest rates: If you do choose to borrow money, a good credit score can help you secure lower interest rates. This can save you money over the long term, as you will pay less interest on your debts. This is especially important for larger loans, such as a mortgage, where even a small difference in interest rates can result in significant savings.
- Employment opportunities: Some employers may conduct credit checks as part of their hiring process. Having a good credit score can demonstrate to potential employers that you are financially responsible and may increase your chances of being hired.
- Insurance premiums: Your credit score can also impact your insurance premiums. Insurance companies use credit scores as a factor in determining risk and setting premiums. A higher credit score can result in lower insurance premiums.
- Rental applications: Landlords may also conduct credit checks as part of their rental application process. A good credit score can improve your chances of being approved for a rental property and may also result in more favorable rental terms.
In conclusion, maintaining a high credit score is important, even if you have no immediate plans to use debt. It can provide you with greater financial flexibility, better access to financial products, lower interest rates, and even impact other areas of your life such as employment and rental applications. It is important to establish good credit habits early on and maintain them over time to ensure that your credit score remains strong.
