Ditch Your Credit Score

The Good

The best part of not having a credit report or score is that it means you don’t have any debt. This is becoming a rarity these days but I believe it is necessary in order to set yourself up for a successful financial future. If you fall into the debt free category, congratulations. This is a great thing but because of the way our society is setup these days, there might be some hoops to jump through…

The Bad

Simply put, not having a credit score can be a nuisance. If credit bureaus don’t have a record of any credit lines taken out in your name, there are many hurdles you might need to leap over in order to get what you need. For example I couldn’t even sign up for an IRA online with a mutual fund company because the way they verify your identity is through one of the three credit bureaus. According to the credit bureaus I don’t exist so they couldn’t verify my identity. Another mutual fund company used public records instead, and I had no issue signing up for an account with them.

Another example is apartments. I’ve lived at three different complexes in my life and the first two I lived at had zero issues with me not having a credit report. The third complex however, did have an issue with it. In the end I had to pay a deposit of close to 7 times what the average person would have had to pay. Ridiculous right; a person strapped to the hilt with debt gets a lower deposit even though one bump in the road would bring their financial house crashing down with no way to pay any of their bills. But someone comes in without a credit report at all, which means they’ve lived a financially responsible life, and they are punished for being financially responsible. We live in a screwed up world and I have one more example for your enjoyment.

When I signed up for electric service at my second apartment I failed both of their identity verification processes. So I had to fill out a form in front of someone at my credit union and then they had to notarize it. I had to get the form filled out and delivered to the electric company within the next seven days or my electric service would be turned off. I also had to pay the highest security deposit possible. Come to find out, someone else at the same complex who had a terrible credit score had to pay a deposit that was less than half of mine. So you charge someone a lower security deposit because they have a record of not paying their bills and you know full well that no lender would go near them but you then charge someone else a higher security deposit because they do have a record of paying their bills? Did someone reading this just say ridiculous? I’m sure I heard someone say that. Welcome to America, the land of the asinine.

Despite rumors floating around out there, I’ve never been completely rejected for anything. I think this is a huge misconception that gets spread around. For example, I’ve never been turned down for a job because of a blank credit report. If a company would ever turn me down for a job due to not having a credit report then I would take that as a sign I shouldn’t work for them anyways. They are perpetuating a terrible system and their obsession with debt will eventually put them out of business some day. Any who, not having a credit report has only cost me time and money. Most of the extra money I’ve spent has been in the form of deposits. They were later returned once companies found out that not having a credit report doesn’t automatically make you a deadbeat.

From a Biblical perspective there is something something good that come out the bad discussed above. You can use these frustrating experiences as a platform to spread the Gospel. It is something I hope to get better at because letting people know why you do what you do is more important than getting frustrated and angry at them. No matter how much extra money you’ve had to spend, no matter how many phone calls you’ve had to make nor how many hoops you’ve had to jump through. Tell them you do this in order to be responsible with the resources God has provided to you. You depend on His provision and not the provision of banks and credit card companies. I hope I will be better at this in the future and I hope you will be a hundred times better at it than I’ve been in the past.

The Ugly

If you would ever “need” any form of debt it would be nearly impossible to get it without first spending years to create a perfect concoction of past credit lines and debt payments on car, home or other loans.

Usually there is one form of debt that is considered not as bad, the mortgage. In order to have a chance at getting a mortgage you would need to go to a local credit union or a small mom and pop bank that underwrites the old fashioned way. This isn’t impossible to do but be prepared to make a lot of calls to find an institution who will loan to you. Also get ready to fill out a ton of paperwork and also collect a ton of references. The process will be slow and painful but it is possible. I’ve heard of people being able to do it and I even asked my local credit union if they offer manually underwritten loans. They do but they told me it wouldn’t be an easy nor painless process. My hope is that I will one day be able to pay cash for a house instead of going the mortgage route. But who knows what the future will bring. I sure don’t.

Getting any other forms of debt are pretty much off the table without having to pay 10% or more for said loan. This is why an emergency fund is necessary to have. I also don’t believe that 3 to 6 months is enough for an emergency fund. It is a great start and is defiantly step one but I would shoot for at least 12 months. This is a great cushion to have and I believe some day you will be very thankful you have it. There are many Bible verses about providing for your family and an emergency fund is one of the best ways you can do this even if bad times come.

Conclusion

In the end, the detractors are far outweighed by the positives in my opinion. Ditch the I’m in debt score for good and start living on cash. Yes there will be hassles here and there but it is worth it for the better night of sleep you will get knowing a bank doesn’t own your life and financial future.

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