A good credit score is necessary to be able to finance most big ticket spending items in the U.S., but getting caught playing the credit score game is a trap, according to personal finance personality Dave Ramsey.
The average FICO credit score in the U.S. in 2021 was 714, which lands in the good range. Over 46% of Americans have a credit score of 750 or higher (very good and exceptional) while only around 15% have a score below 600, according to Finmasters.
DON'T MISS: Dave Ramsey's Latest Controversial Opinion Is About Your Credit Score
"Quit playing the credit score game. A high credit score does not equal success," Ramsey told his 5.9 million Facebook followers this week.
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Ramsey then broke down exactly how those credit ratings agencies come up with the number that defines you.
"35% of a credit score is based on debt history. 30% is based on dbt level. 15% is based on length of time in debt. 10% is based on new debt. 10% is based on type of debt. 0% is based on how much money you actually have," Ramsey said.
While some argue with Ramsey's logic, he isn't alone in his thinking, as financial influencer Suze Orman believes in a similar line of thought, saying, "you need to focus more on saving money than paying down the balance on your credit cards."
Americans have a staggering $986 billion in credit card debt as of fourth quarter 2022, according to LendingTree. 20 years ago, that number was just $480 billion. Since 2021 alone balances have risen $130 billion.
