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Do you, or someone you know personally, have a ZERO credit score like Dave Ramsey talks about?

post #1 of 172
Thread Starter 

I've never met anyone who has.... and I'm wondering how it effects their life if they're not a billionaire.

 

I'm nowhere near being able to have a blank credit report, but when I pay off my mortgage, I think I want to take the plunge and close the credit card and be 100% credit free.  But it's a big leap of faith!

 

So, does a zero score really exist?!?

post #2 of 172

Oh, man!  Someday...

 

I think all the time how wonderful it would be!  DH and I have little debt.  We did have to recently take out a small car loan, but once we have our debt paid off and finance a house, we'll hopefully never use credit again.  I would totally cancel my credit cards right now if I didn't have to maintain a good score for when we buy a house.  Unfortunately, as a SAHM married to a public school teacher, I don't anticipate being able to buy a house outright, especially as we haven't even begun saving for a house at all yet. 

 

Once again... someday!

post #3 of 172

Well, we got down to just a car lease and an Amex card (so no revolving balance) and our score dropped.  It went back up when we bought a new house and had to take out a mortgage.

 

Really irritates me that your credit score suffers if you pay off a mortgage. 

post #4 of 172

I do not know of any personally but I imagine Amy Dacyczyn does from the Tightwad Gazette.

 

It is my goal.

post #5 of 172

Don't insurance companies use your score to determine your rates?

post #6 of 172

Some insurance companies do.

post #7 of 172
Quote:
Originally Posted by cristina47454 View Post

Don't insurance companies use your score to determine your rates?



You can go through a company that uses an underwriter. It's a longer and more complicated process, but it's doable. You won't be able to use Progressive or companies like that without paying a lot for your insurance.

 

I've thought a lot about it, and while I detest the system, I also fear having a blank credit report (and it's not a zero, it doesn't exist for people in this situation) in case of a catastrophic event that would cause us to *need* credit desperately (medical emergency, someone stuck in a country with a major disaster and needs money to get home, etc.).  

post #8 of 172

Actually it is not a lot more for insurance that is a myth. A credit score is based on the fact you are paying interest. So you might be paying for cheaper insurance but in the long run you are paying a lot more.

I still do not see the need for credit when one plans and has an emergency fund in place for unexpected emergencies.

post #9 of 172
Quote:
Originally Posted by mum4boys View Post

...

I still do not see the need for credit when one plans and has an emergency fund in place for unexpected emergencies.



Because no matter what, something could come up that would exceed your emergency fund.

 

Let's say you have $2M in cash (money market, stocks, whatever - easily made liquid) and you have a catastrophic medical issue.  You can no longer work and in a couple of years you've hit your lifetime cap on insurance.  Your medical costs are....let's say $300K a year.  What do you do once you run through that $2M?  If you can't borrow against your house or finance those medical costs where will you be?  Yes, you can declare bankruptcy but you still need something to live off of, as does your family.


Smaller scenario - you are on vacation, stuck without access to a commercial flight and your only option is to charter a plane.  Can you do it?  Do you have the available credit?  We came within about 20 minutes of doing this once.  It was going to be $8K.  You aren't going to have that much cash on you and they aren't fueling the jet without payment.

 

We've been without income for about 18 months now.  Our cash reserve is probably a bit more than most but we still have expenses.  Knowing we have a lot of equity in the house we could tap into if needed is comforting.  In fact, before we sold our old house, that was part of our long term "SHTF" plan - pull a mortgage on it.  If needed, that would have solved a lot of problems.  Knowing we have the means to finance a car if something happens to ours is good.  I don't want to write a check for a car right now, I'd rather have the cash until we have income again.

 

No matter how much you have (let's say within reason, assuming you are not independently wealthy in the over 20 million in cash category) there are scenarios where you may need to finance something.

post #10 of 172

I would never ever borrow cash without a job. We have lived without credit now for 10 years. We have had some really hard times but have never ever resorted to getting a credit card or tapping into a line of credit. When I say hard times I mean, less then $10.00, no gas and a child in the hospital. If something comes up that exceeds are emergency fund, we do without or we think of some other way to get by. It is a different mindset.

post #11 of 172
Thread Starter 

I am confident in my ability to live without credit (goal: BS #7 by 12-31-2014!!) but I am really curious if people will actually achieve a zero credit score if they have no accounts open.  I just reviewed my credit reports (like I do every year) and a mortgage that was closed 8 years ago was somehow in the "active" accounts again on one of my 3 reports (Experian, I think).  Now unless I've missed that for 8 years running (which I doubt; I go over it with a fine toothed comb every year) it mysteriously went from closed to not closed (but not reported on since 3-03).  I disputed it; wonder how long it'll take...

 

There's a lot of old stuff on there.. like a Victoria's Secret card I opened in 1997 and used once, date of last "activity" 2001, still under my closed accounts.  I have 7 of those still lingering. 

 

Supposedly after 6 months of all closed accounts it goes to zero.  Dave Ramsey is the only one I've ever heard achieve this, and I wonder how much time he (or a staffer) took to manually get every single thing off of there so he has zero score and a blank report... he claims there's nothing on there, just a blank sheet.

 

Maybe I can find the elusive owner of a zero credit score on Dave's messaging boards.  I've never heard a caller who has one (and I've been listening almost daily for years).

 

Continuing my snipe hunt...

post #12 of 172

well if you have ever opened any kind of account (utilites etc) then you will probably have some kind of credit score.  at any rate x and I didn't use credit for 10 years and we did great, even bought our house with cash

post #13 of 172
Thread Starter 

Wow, good for you!!!  Must be a nice feeling...

 

I've never seen utilities/ cell phone report to my credit report; I know they check it but I've never seen them listed...

post #14 of 172

We did until we bought our current house.  Our previous mortgage was paid and other than utilities and monthly bills (we pay our own health insurance) we had 0 debt.  It is possible!  We saved as much as we could for the down payment on where we live now.

post #15 of 172

Yeah, I don't know if it's really possible to have a 0 score. We have no debt at all (mortgage paid off) and my score is still in the 600s. 

post #16 of 172

I don't know if it's "zero" but when we filled out loan paperwork to get a mortgage (we didn't end up buying) the lender said my husband's credit made it look like he didn't even exist lol.gif He said it wasn't a bad score, there was *no* score. I guess that's what it means?

 

We don't use any kind of credit at all, although I personally am not debt-free. The one large debt I have is removed from my credit (it's dropped off) but I still 'owe' it. Although, I don't pay it due to principle (I didn't incur the debt but it's mine, long story).

 

Anyway, we don't have a problem not using credit and I pray we will always be able to avoid it. I really, really dislike the idea of financing anything except possibly a house someday.

post #17 of 172

No score is the same as a bad score. You get bad rates, they require huge deposits and getting credit is very difficult.
 

Quote:
Originally Posted by cristina47454 View Post

Don't insurance companies use your score to determine your rates?



Somewhat, they also use your history with them so your rates do drop as the time you've held the policy increases. But you're tied to that company. I don't understand why having no credit history would be a good thing. It's like people who don't get birth certificates for their children, you don't realize how much use it is because it's so automatic. The utility deposits with no credit score are no fun. It's just plain irritating to have more than $1000 tied up in nothing at all.

 


 

Quote:
Originally Posted by mum4boys View Post

Actually it is not a lot more for insurance that is a myth. A credit score is based on the fact you are paying interest. So you might be paying for cheaper insurance but in the long run you are paying a lot more.

I still do not see the need for credit when one plans and has an emergency fund in place for unexpected emergencies.



A credit score is not based on paying interest. You can have a great credit score without having any debt at all.

post #18 of 172
Quote:
Originally Posted by mum4boys View Post

I would never ever borrow cash without a job. We have lived without credit now for 10 years. We have had some really hard times but have never ever resorted to getting a credit card or tapping into a line of credit. When I say hard times I mean, less then $10.00, no gas and a child in the hospital. If something comes up that exceeds are emergency fund, we do without or we think of some other way to get by. It is a different mindset.



First, I didn't say no job, I said no income.  Not everyone's income is tied to a traditional job.

 

Second, so if you have $10 in the bank and a child in the hospital and your emergency fund is depleted so you have access to $10 in all the world BUT you have a house valued at $500K just sitting there, you wouldn't take out a mortgage to access that cash until it sold?  Really?  You'd be without transportation of any kind, scavenge for food and allow the ....state?  ...foster system?  ...other taxpayers?  to take care of your sick child because you won't take out debt?  That's a very naive, black and white view of the world.  Works for making absolute statements on a message board but not so much in real life when you are faced with tough choices.

post #19 of 172

How is no score the same as a bad score when my husband has zero debt? We just don't use credit (thank God). We don't believe in buying things you can't afford with the only exception being a house possibly. We did get the mortgage btw, with a great rate...(we chose not to buy at that time though).  We've never had a problem getting insurance, utility with low deposits, and we even qualified for this apartment at the lowest deposit level (meaning, lowest 'risk'). We were told we'd have a higher down payment than typical when we looked into financing a vehicle but it wasn't insane or anything. Clearly choosing not to play the credit game hasn't hurt us but I'm not sure how it's "the same" as bad credit. I'm genuinely asking.

 

I don't see it at all the same as not getting a birth certificate for your child (though the credit card companies would have you believe it is lol). You need a BC to prove your actual identity. We haven't gotten that far with credit (yet) and I am very pleased to see people refusing to play the game, by choice.

post #20 of 172

I know several years ago my dad needed to buy 5 figures worth of seed corn and the supplier did a credit check on him and it turned up nothing.  The supplier expected a cash deposit that he paid with no issues 

He hasn't had a bank loan since the early 1970's and has never had a credit card.  He lives life just fine and since my mom would be the one to book a hotel (and she has a credit card) it has never been an issue any other times.

 

DH and I have had no debt since 2007 (and haven't applied for any new credit since about 2004) but when I ran a report a couple of months ago it still plenty of items that show up.  On mine utilities did show up and so did the name of my cell phones provider. Since I don't plan on getting rid of either of these anytime soon I don't think I'll get to Zero credit like my old man.

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