Dave Ramsey Says a Person’s Credit Score Is Not a Measure of Winning Financially — Here’s Why

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Your credit score can seem like the most important financial metric out there. It’s used to determine whether you can apply for credit cards or even to mortgage a house. But according to finance expert Dave Ramsey, it’s not a comprehensive measure of a person’s overall financial health or success.

“Hear me clearly on this: The credit score is NOT a measure of winning financially,” he said in a post on X. “It is 100% based on debt. The credit, or FICO, score is simply an “I love debt” rating. No part of the credit score calculation even hints at how much wealth you have.

Ramsey is spot on. Credit scores primarily reflect your history of managing credit and debt. They focus on things like payment history, credit use, and length of credit history. While they do show some important aspects of financial responsibility, they don’t account for other critical factors. Here are some credit score flaws:

Credit Scores Don’t Consider Assets

Credit scores don’t take into account your assets like savings, investments, real estate or personal property. Someone with a high credit score, for example, may still have limited wealth if they haven’t accumulated assets over time.

Credit Scores Don’t Consider Income

Your credit score also doesn’t reflect your income level or earning potential. You can be someone with a low income but excellent credit management, or you may have a lower score than someone with a high income but poor credit habits. It’s all relative.

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Credit Scores Don’t Consider Debt vs. Net Worth

Credit scores focus on debt management, but your net worth (assets minus liabilities) is greater proof of your financial well-being. You can have a high credit score, for instance, and still have substantial debts, reducing your overall net worth. “We as a culture just take it for granted that a high credit score means we’re doing great. It doesn’t. It just shows how much we enjoy being in debt,” said Ramsey.

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