A long time ago I told my friend Brad from EnemyofDebt.com that not paying attention to your credit score is dumb. I refused to listen to him on all his thousand and one reasons why he could care less, and I thought the fact he said he had a score of “0″ (yes, ZERO) was cockamamy. I’m pretty sure I told him it wasn’t even possible, which I later came to find out was kinda sorta untrue (it’s possible to have no credit score, which in essence is kinda like a “0,” even though it’s not).
Here we are though, 3 years later and much wiser in my age, and I’m starting to come around to the idea a bit more :) Not that I’m sold completely on the whole thing – I’m not, and I’ll totally continue to monitor my own ‘cuz I think it’s smart – but I do see where Mr. Brad is coming from more now. His stance can be simply summed up like this:
If you’re never taking out a loan again, why does your score matter?
An interesting take on the whole score game for sure. Especially if you’ve never really thought about it before. Why DOES your score matter if you don’t have any loans or credit to your name at all? Is your CASH worth less depending on what your score reads? It’s a cool way to think of things mainly because it’s so drastic. When was the last time you decided to never have a loan or credit card?? Haha… for me it’s probably been a good 25 years, like when I was 7 ;)
And just like I thought 3 years ago when first debating against Brad, some of the same questions remain for those who believe it’s just not that possible:
- How do you rent an apartment without a credit score?
- How do you BUY a car without being able to take out a loan??
- How do you get A HOUSE without taking out a mortgage?? Or mortgageS?
All common occurrences in our lives which we’re just so used to these days – something Brad says is part of the problem: Society has deemed taking on credit and loans as perfectly normal, so people rarely stop to consider the alternatives anymore! Nonetheless the consequences.
But what about those questions up there? What do people like Brad (aka the anti-debtors) say about ‘em? I picked apart an email he had shot me a couple weeks ago where he was doing a Q&A with one of his readers (I had told him if he didn’t put it on his blog I was going to! Haha…), and he answers all 3 of those questions as he is always known to do: with passion and vigor :)
Renting an apartment without a credit score:
“You can definitely rent an apartment without a credit score. You can check out a service called eCredable.com that allows you to build a payment history to show landlords that you are financially reliable. It allows you to track your payments for utilities, rent, etc. It is a great resource! It’s also great to have an emergency fund savings statement showing how much you have saved up.
If you have no debt, can prove you are reliable, and can show you have savings, most landlords would be glad to have you. As a former landlord myself I know for a fact that a credit score really isn’t a reliable indicator as to how good of a tenant someone will be — financially or otherwise.”
Buying a car without a credit score:
“Buying a car is certainly possible without a credit score, assuming you are planning to buy one without going into debt. Having a car payment is one of the worst ways to own a car. You do not need a car payment to own a car as long as you buy a gently used 2-3 year old car that has had one owner who took care of it and can prove it. I do not recommend getting a car using debt — EVER — therefore your credit score doesn’t really matter when buying a car.”
AKA if you’re paying all *cash* for something, your credit doesn’t even become an issue. And I’d even tack on here that you could get a car for CHEAPER too if you presented the “all cash” option during your initial negotiations! Whether you buy it from a dealer, or from an individual. Here’s a good article Lance did for us the other month on paying cash for a car vs. taking out a loan, for what it’s worth. Even though it’s def. PRO-loanage ;)
Buying a home without a credit score:
“If you’re looking to get a house via mortgage one day, then you can do so without a credit score. It’s not as popular as other routes because society is so attached to their credit scores. It’s called “manual underwriting” and there are places that will take your real life information (renting receipts, eCredable reports, credit history (different than credit score), savings, income, and how much debt you have to evaluate your ability to pay a mortgage. (15-year fixed rate) My wife and I are paying cash for our next house so we don’t even need that.”
While pretty extreme, you can see it IS possible to function in this world without worrying about your credit and/or credit score. It mainly becomes an issue whenever you need to take out that loan or get approved for something/etc. (And maybe when you’re looking to get employment too as many companies now check out your credit too, whether you believe it’s right or wrong). If you have no plans on ever doing it though, why should it matter if you can get an excellent interest rate or not?
Brad ends his email to his reader like this:
“Chasing a credit score is a slippery slope and many experts still believe that it’s the only way to function in today’s day and age. It’s not true though and there are plenty of people living debt free without a single worry or care about their credit scores. It’s just a matter of how much you really want to be, stay, and live debt free. You don’t have to play the credit score game. The choice is yours…”
Interesting stuff to think about either way. Could I do it? No way. I enjoy taking advantage of my credit cards and loans to better leverage my money and (more importantly) my TIME, and I also like trying to compete for the best score too ;) As possible as the non-credit lifestyle may be for some, it’s just not that practical in my world. And I’m totally okay with that as long as things keep pushing forward and I don’t make any stupid mistakes ;) I’ll gladly take on a car loan if I can do something better with my cash instead, and I def. don’t want to wait 100 years to save up enough to buy a house cash-free either! Haha… Though I’ll gladly give Brad mad respect for doing so as it takes a LOT more restraint and patience that I’ll ever have, that’s for sure.
At the end of the day, though, I choose practicality and convenience over extremism. ‘Cuz I know myself well, and I’m confident I won’t get into much trouble using credit towards my advantage. If you DON’T trust yourself though, or you SUCK at managing debt/credit cards/etc, by all means stay away!! Maybe give Brad’s take some serious thought and slow things down a bit? There’s nothing wrong with choosing either side here as long as it’s the right one for YOU. So definitely consider your own habits when reading info about this stuff online, or wherever. You personality matters a LOT here.
Thoughts? Questions? Concerns? I’ll try and get Brad to watch this thread in case anyone wants to throw some zingers his way and/or give him props ;) He’s one of my best blogging friends I have, and I know he appreciates a good debate! So let’s see what you’ve got.
PS: Other credit-related reads from my archives:
– Top 10 Credit Score Misconceptions
– Awesome FREE Place to Check Your Credit Score and Report
(Photo credit: ell brown)