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Living Without a Credit Score

Picture this: You’re on the hunt for a new-to-you car. You walk into the dealership only to hear Billy Bob say those dreaded words: “Let me pull your credit report.” Sound familiar? Of course it does!

Instead, imagine walking into that same dealership with your head held high, pockets full of cash. When Billy Bob mentions checking your credit, you respond confidently, “No need—I’m paying in cash.” Yeah, you are . . . because you’re living without credit.

This dream can be your reality! Seriously, have you ever stopped to consider what life could look like if your major life decisions (and purchases) didn’t revolve around your credit score? If not, today’s the day!

We’re going to walk you through what it looks like to live without a credit score when it comes to buying a home, renting your next apartment, renting a car, and more. So, hold on tight—you’re in for a lot of surprises!

How to Live Without Credit

Buying a Home

Don’t have a credit score? Good. Despite what everyone says, you don’t need one to buy a house!

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Now it’s time to focus on one thing: saving up a large down payment to buy your next home. Without a credit score, your down payment is a big factor (along with your job and how long you’ve been employed in that line of work). You’ll also want an outstanding history of rental and utility payments. Look for a mortgage company that uses a process called manual underwriting, sometimes called nontraditional credit or no credit score lending.

If you’re just starting your home-buying journey, be patient. Rent for a while if you need to and save up even more for a down payment. And whatever you do, don’t buy a house until you’re ready. That means you’re completely out of debt, you have 3–6 months of expenses saved in an emergency fund, and you have a good down payment of at least 10%—but 20% is even better. Of course, if you really want to, you could always skip the mortgage and just pay straight cash for a house. Cash is king, baby!

Renting an Apartment

Most apartment complexes will work with you if you can provide a deposit that includes first and last month’s rent, proof of being a good renter (such as previous on-time utility payments), and a security deposit. Be sure to ask them up front about their process and what type of information they’ll need to get started.

If they want a credit score and you don’t have one, simply tell them you don’t have debt and you use cash. A rental history referral from your previous landlord will help too. If it’s your first time renting, you might have to look around for a little bit. But don’t worry, you can find someone to work with you.

Applying for a Job

This is a recent trend with companies in the financial industry or jobs that need a special security clearance—banks, mortgage brokers, investment companies and so on. They want to see how you deal with money if you’re going to be helping others with money. Again, the key here is to learn the company’s hiring process up front so you can explain why you don’t have a credit score if they ask you about it.

Remember, no credit score is not the same thing as a bad credit score. (We’ll get into that more below.) If you have a bad credit score because of any outstanding debts or late payments, that’s a different situation entirely. Focus on cleaning up those old debts with the debt snowball method and start fresh!

Traveling

The naysayers out there want you to believe you can’t travel without a credit card. But that’s just not true! Your debit card (not to mention cold, hard cash) works just as well—better, actually—than a credit card. When you use your debit card, you’re using your own money you worked hard for instead of borrowing money and paying interest!

If you’re booking a room at a hotel, call ahead and let them know you’ll be using your debit card. Then, make sure to budget for the possible security hold they’ll put on your card while you stay there.

You can also rent a car using your debit card. Each company has its own debit card policy, so it’s always good to do your research. Like we said earlier, just call ahead and ask about any holds they might place on your debit card and budget for your trip accordingly.

Benefits of Living Without Credit

It’s time to measure your financial success in a different way—by what’s in your bank account. Who said the credit score is the only way to measure financial success? We sure didn’t!

Now that you know you can rent a car, take out a mortgage, and even get a hotel room without a credit score, let’s dive into some other reasons why living without credit cards is a great idea:

1. You’re no longer enslaved to a life of debt.

When you’re not a slave to your credit score (or your credit cards, for that matter), you’re no longer worried about payments for things you purchased in the past—or worried about how you’re going to pay for your future. Your income is your biggest wealth-building tool. When you don’t have to make payments on your credit card (or any other type of debt), you’re free to use your money to build wealth for the future.

2. Your bank account becomes your measuring tool.

If you haven’t heard, the FICO score is just another name for the “I love debt” score. Think about it: Businesses, banks and even the government use this silly little number to analyze your past and present relationship with debt—and only debt. Your FICO score doesn’t care about how much money you make or how much you have saved. In fact, you could inherit a million bucks tomorrow and it wouldn’t change your credit score by one point! So, forget the credit score and measure your success with money by what you actually have in your bank account.

3. You’re in complete control of your finances.

Like we’ve said before: Cash is king, baby! When you start saving up for life’s big purchases (and paying for them in cash), you’ll find that a credit score is worthless. Not only will you have the power of negotiation on your side, but you’ll also find out how much easier it is to buy things outright. Who’s going to turn down cash?

4. You’re less likely to overspend.

When you’re not relying on a credit card for every little “emergency” that pops up, you only have one option: to pay for things with the money you have in your bank account. When your money is gone (or spoken for with your zero-based budget), you’re done spending. Living life without credit means you know exactly what it’s like to live within your means—and it feels good.

5. You’ll build wealth and give generously.

When you’re debt-free and you’ve reached Baby Step 7, you can finally start living and giving like no one else. Baby Step 7 is all about building wealth and giving. Yup, that dream retirement you and your spouse have been working so hard for is finally at your fingertips. Maybe you’ve always wanted to travel overseas to help a nonprofit organization or give 50% of your earnings to charity every year. The options are endless, because you’re not tied to making payments every single month. Instead, you get to dream of what it can be like to use your wealth to help others. And that feels good.

Is Credit Necessary?

Not at all. You don’t need a credit score to get through life. Gasp! Sounds a little backward, doesn’t it? Especially when you’ve been raised on the idea that you absolutely need credit to do absolutely anything your entire life.

Do you really need credit?

Buy a House

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Rent an Apartment

✖️

Go on Vacation

✖️

Apply for a Job

✖️

Remember, a credit report is a measuring tool for lenders. They use it to decide how much debt they think you’re capable of handling. But here’s the thing you need to know: You don’t have to borrow money! And like we shared earlier, you can buy a home, travel, rent an apartment, and get a job—all without a credit score!

Maybe your parents gave you a credit card in high school to help you build your credit before you went off to college or found your first apartment. Or maybe you’ve always had bad credit and you’ve been haunted by it every time you try to do . . . well, anything!

Like we said before, if you have bad credit because you’re behind on your bills, living without a credit score won’t make them disappear. In fact, those numbers will follow you around anywhere you go—until you take care of the debt.

If that’s your story, your focus should be on paying it off as fast as you possibly can. It’s time to defeat your debt with the 7 Baby Steps (specifically Baby Step 2). And if you want more help along the way, we show you step by step how to kick debt to the curb in Financial Peace University.

No Credit vs. Bad Credit

We said earlier that there’s a difference between having no credit and having bad credit. If your FICO score lands below the 670 mark, or your Vantage Score number is below 600, you’ve got some work to do to clean up your debt mess.1

Scores like that indicate big financial trouble—you’re late on payments (or stopped paying altogether), defaulted on a loan, or even filed for bankruptcy.

The only way to fix a bad credit score by attacking your debt head on! And what better time to start than today?

What It Means to Have No Credit Score

There are two ways people reach the goal of not having a credit score: One, you never open a line of credit or use debt to make a purchase. Ever. Two, you realize living with debt is no way to live, so you pay it all off and never use debt again. While your credit score will hang around for a while, after a few years, it will disappear. And good riddance! You never needed it anyway!

Listen, there are lots of people out there who don’t have a credit score. And if you’re one of them, that’s awesome. Maybe your grandfather told you to stay away from credit cards when you were little and you listened to him ever since (smart move). Or maybe your family has been buried in debt ever since you can remember so you decided to leave that world behind.

No matter your story, or what your reason is for having no credit score, we’re here to encourage you: You don’t need it. Living without a credit score is truly possible!

You Can Live Without a Credit Score!

Our culture (and your broke next-door neighbor) will tell you otherwise, but living without credit is possible! Sure, sometimes it might feel a little inconvenient because of the way some businesses rely on the “almighty” FICO. But seriously, living without a credit score will never be as inconvenient as paying interest on that fancy steak dinner you ate . . . last year.

Are you ready to break up with your credit score yet? We hope so. It’s time to relearn how to manage your finances the right way. Learn how to dump debt, save for emergencies, and build a solid financial future with Financial Peace University (FPU). In nine lessons, you’ll realize that a credit score was never your friend anyway. That’s right—FICO doesn't determine your worth. You do

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Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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