How Can I Build My Credit Without a Credit Card?

Rachel: I heard this all through college: “I have to have a credit card so I can build my credit.” I heard that from professors, friends, my friends’ parents . . . everyone.

So I started wondering, Why do I need a credit score? I looked online, and I found this: Your debt history counts for 35% of your score. Your debt amount is 30%. The length of time you’ve been in debt counts for 15%. New debt counts for 10%, and 10% is the type of debt you have.

So it’s all about debt! To get a great credit score, you have to be in debt and stay in debt. Then, you use your credit score to go into more debt! A good credit score helps when you go and get a car loan—but you don’t need to worry about that because you’re paying cash for a car, right? And when you get a mortgage you can actually go through a process called manual underwriting, which doesn’t require a credit score.

So if you’re not going into debt, then you don’t need a credit score! And that’s the truth. The only reason you have a credit score is to go into more debt.

I know this is weird advice, because everyone will tell you how important a credit score is. But I’m here to tell you that it’s not. You can live life without a credit score!

Rachel Cruze Growing up as Dave Ramsey's kid, Rachel Cruze learned the basic principles of money at an early age. She travels across the country teaching those same principles, in a personal and passionate message of money and hope, to teens and young adults. To find out more about Rachel, visit www.daveramsey.com/speakers or follow her on Twitter at @RachelCruze.