Hey Dave Ramsey: Zero debt = zero credit history
The Standard Times article (link) tells the sad tale of Douglas Boice, a man who is about to lose his home due to physical disability and mounting medical bills:
"When my wife was sick (liver and heart disease), I took care of her, and all my money went to care for her, and then when she died, I took all our money and paid off the mortgage on the house," Mr. Boice, 62, said. "I've been to every bank in town and been turned down. Everything I have tried to do, I ran into a wall."
A fateful decision in 1980 stymies him two decades later.
"We joined Amway (a network marketing company that some allege is actually a lifestyle cult) and we adopted their cash-only method," he said. "We never used credit to buy anything. If we didn't have the cash, we didn't buy it."
The problem he faces now in seeking financing to pay his debts to remove the liens and fix his house is that he has no credit history, Mr. Boice said.
"The banks told me if I had bad credit, I'd be better off than having no credit," he said.
I realize that Mr. Boice doesn't claim to be a Dave Ramsey disciple in this piece, but his plight is a perfect example of the dangers of the All debt is bad! mantra that Ramsey preaches. When Mr. Boice paid off his mortgage and lived a cash-only lifestyle, he was essentially "off the grid" as far as lenders are concerned. While he did gain "financial freedom" for a time, that changed quickly when his wife's medical bills piled up and he was no longer able to work after suffering an aortic aneurysm.
Dave Ramsey states on his web site that "There is NO positive side to credit card use.". Wouldn't the credit history that responsible credit card use provides be a positive thing when it keeps a 62 year old widower from losing his home? Perhaps using a credit card for small purchases on a monthly basis (and paying the balance in full each month) isn't such a bad thing after all...