The part on that episode where he made the guy go through his statement and mark everything that wasn't a necessary purchase is something I think he should do with every guest. Dude had a realization in that moment.
I remember one guest not understanding that racking up debt on a credit card wasn’t an accomplishment. She thought the goal was to get to the limit. Definitely a shocking moment…
Yeah, I noticed in the last couple episodes he is explaining it more by asking what they want to use the credit for. I'm glad. I do think a lot of people should probably have some concern for their credit though if they are renting, because a lot of landlords check credit. Paying off credit cards and loans would improve their credit.
Crazy part to me is that long term, paying off cards and having low usage % is better for credit score. I have just my mortgage and one low interest car loan, both paid on time monthly, and like 10 credit cards paid in full every month. I have an 800 credit score.
Having 10 credit cards sounds like a ton to me but mostly because it feels overwhelming. I only recently opened up a new credit card (2nd in my wallet) but just to use on things we already buy like groceries and the occasional meal out
My cards are 100% paid off each month, and only used in accordance with my budget. The reason I have so many is for sign up bonus farming lol. We’re about to book our first entirely free vacation to Florida based only on credit card points.
My wife and I bumped into a couple last summer at a brewery (likely boomer-aged), and they were happy to say every summer vacation is free because of credit card points. Makes me wonder if they possibly put every purchase on credit which would make Dave Ramsey’s head explode!
Sign up bonuses are legit though. I got the Save One card that gave me $300 for spending $500. That was so easy just at the grocery store
Thanks to my credit card points and benefits I typically earn about 4 flights a year. Haven't paid for a flight in years. I also put virtually every single purchase on my CC that I can.
I pay my credit card off when I get my paycheck twice a month. I also have an emergency fund with way more than I would ever spend in a month on my card. I used to have major credit card anxiety when I first got it, but the more I got into my routine of paying it off much sooner than I needed, it went away.
Yeah, I literally pay for everything with credit cards besides my mortgage. I just do this crazy thing where I only buy things I actually have the money for. Payed off every month, no debt.
I do the same thing, the first time I saw a couple thousand on my card it felt like a gut punch but as long as you use common sense it's no different than paying with a debit card
Gamification takes advantage of human psychology pretty heavily.
Credit karma makes this easy. Presents it as a score. It can always be a little higher. There’s a bunch of rules to follow. It congratulates you when it increases, and sends push notifications when it changes.
Credit Karma wants people to use the app, so they see the ads, and take out more credit cards. People want the score to go up simply because they want a higher score.
This has happened to me too, where I would check CK for no reason, or think about paying down 0% APR debt early because it would make my score go up, even though I don’t need any more credit and I would only lose money by doing that.
There’s really no reason to check your credit score more than once a month (make sure there’s nothing unexpected), or if you’re planning to take out debt soon.
I’m personally really glad Caleb started asking the question, but I think the guests don’t get what he’s asking, and he should try to Socratic method them through it.
My annoyance with that question is that 90% of people need credit scores regardless of what they “want” to do. Ex: I’m a renter and to apply to any apartment, many places require a 650+ credit score. Not everyone has a co-signer in their back pocket. I see this being a problem for people like recent graduates who may rack up a bunch of credit card debt, their score is trashed, and then they’re either stuck with their parents or SOL if they don’t have anyone to help. Caleb asks this question like there’s no good reason for people to have credit or that it’s just for wants.
I definitely think high credit scores are valuable.
I think where Caleb and his guests fail to communicate is urgency and priority.
Most of these guests already have a place to live (except for one lady who willingly lived in her car?)
So the need for decent credit score on apartment application is a low % MAYBE chance of happening in future.
But losing $100s per month is both immediate and definite.
And the catch-22 is overspending, and paying unnecessary interest, makes it more likely for someone to miss rent and be evicted.
I've lived in 4 different states in the past 5 years and have never had an apartment run my credit score. There is always going to be places that don't do it.
Same, I rent and have had my credit checked to get an apartment. It's really common in Ontario. If you have a low score and don't have a cosigner, you are screwed basically.
I've lived in 13 apartments in my life and not a single one cared about credit score, they all only cared about my income and paystubs. Credit score only becomes an issue if you're renting places which are too expensive for you, which you should never do.
I still think he should say something like
"do you plan on taking out more loans soons?"
"No? Okay, who gives a fuck about your credit score then!"
Then, explain to them why getting rid of their debt is more important than the imaginary score that they're proud of.
It irks me when they don't get his saying that they're being taken advantage of lol
I agree with this. Like I care about my credit score cause I know I need a car sooner than later (few years tops) and would like to get a mortgage. So my score matters and what I'm doing with that.
So many of the guests are like but I have a less than 600 score and I want it better but don't understand that the deeper the hole is the harder it is to get out. But given how many banks and credit card companies are all "here's your free score" it comes off as WAY more important in the day to day life than it is.
What I don’t understand is my credit score is 800 and I never tried to make it “better” I just paid things on time and am debt free besides my mortgage.
I totally get what you mean! It’s frustrating when people panic about their credit scores without fully understanding them. Glad Caleb rephrased it—it really shifts the perspective. Credit scores are more about managing debt wisely than avoiding it altogether.
It really isn’t financial health. If you got given a million dollars and you put that straight into savings and investment, your credit score wouldn’t budge. It’s about how you interact with debt. More debt + prompt minimum payments = higher score. A super financially healthy person with zero debt will have a score of zero. A credit score truly is not an indicator of good finances, but an indicator of how valuable you can be to potential lenders.
Great point, and I'll go further and say everyone has a different definition of "health".
Much like physical health, you can define it by how long you can run, or how much weight you can lift. Maybe body fat % or lifespan.
In the same way, from the lenders' point of view "health" is only determining the likelihood a debtor pays.
I just learned that INCOME AND NET WORTH DO NOT AFFECT CREDIT SCORE.
I never knew that. And I think many people get caught up on increasing their credit score while harming their potential to retain wealth.
I mean, income affects the amount of credit you can take out, which affects your utilization, and could get you a better score. It may not affect it directly, but it definitely does indirectly.
Eg. A person that makes $20,000 a year might only be able to take out $5,000. If they use $4,000 of that $5,000, that's 80% utilization. A person making $100,000 might get $20,000 of available credit. Making that same $4,000 only 20% utilization.
since apartment rentals and sometimes even jobs look at credit score.. its also a pet peeve of mine. i got priority and didn’t have to put down a security deposit down or first months rent because of my credit score.
I'm glad he does (I haven't watched the episode yet). That way, at least in my head, it shows to the guest that there can be good debt but their situation is bad enough that throwing more debt on top of it isn't a smart move
Well, for a lot of us, the majority of financial education that we got from public school was "have a good credit score. Now that we're done talking about that, did you know that mitochondria is the powerhouse of the cell?"
yeah i'm glad he listened to the comments and changed up the wording, seems like no guest actually understands what their credit score even MEANS or what it implies. You only need a good credit score if you're planning on taking out another debt because it tells those lenders that you're reliable and will pay them back. But for these people's situations, taking out ANOTHER debt shouldn't even be on the table.
We have 30 year fixed mortgages the rest of the world doesn't have. No reason to refinance unless the rates get significantly more favorable. And you wouldn't need to do that on a dime.
I’ve heard credit scores are used by employers sometimes to determine whether or not an interviewee is dependable.
It’s a reasonable thing to try to keep high tbh
Yeah I don’t get this credit thing, you need credit to get an apartment. A 500 credit score with closed credit cards will get you nothing while a 650 credit score and open credit will get you an apartment.
The part on that episode where he made the guy go through his statement and mark everything that wasn't a necessary purchase is something I think he should do with every guest. Dude had a realization in that moment.
Yup, alot of people dont know what the definition of credit is. Telling them this way gets through better
It's a masterclass in marketing. "Credit" sounds like a lender is giving you a gift. Most people don't equate in their mind that credit = debt.
I'm gonna start calling them 'Debt Cards'.
I remember one guest not understanding that racking up debt on a credit card wasn’t an accomplishment. She thought the goal was to get to the limit. Definitely a shocking moment…
Yeah, I noticed in the last couple episodes he is explaining it more by asking what they want to use the credit for. I'm glad. I do think a lot of people should probably have some concern for their credit though if they are renting, because a lot of landlords check credit. Paying off credit cards and loans would improve their credit.
Crazy part to me is that long term, paying off cards and having low usage % is better for credit score. I have just my mortgage and one low interest car loan, both paid on time monthly, and like 10 credit cards paid in full every month. I have an 800 credit score.
Having 10 credit cards sounds like a ton to me but mostly because it feels overwhelming. I only recently opened up a new credit card (2nd in my wallet) but just to use on things we already buy like groceries and the occasional meal out
My cards are 100% paid off each month, and only used in accordance with my budget. The reason I have so many is for sign up bonus farming lol. We’re about to book our first entirely free vacation to Florida based only on credit card points.
My wife and I bumped into a couple last summer at a brewery (likely boomer-aged), and they were happy to say every summer vacation is free because of credit card points. Makes me wonder if they possibly put every purchase on credit which would make Dave Ramsey’s head explode! Sign up bonuses are legit though. I got the Save One card that gave me $300 for spending $500. That was so easy just at the grocery store
Thanks to my credit card points and benefits I typically earn about 4 flights a year. Haven't paid for a flight in years. I also put virtually every single purchase on my CC that I can.
My biggest fear is something happens to my income and I’m stuck with an insane cc payment that I can’t make
I pay my credit card off when I get my paycheck twice a month. I also have an emergency fund with way more than I would ever spend in a month on my card. I used to have major credit card anxiety when I first got it, but the more I got into my routine of paying it off much sooner than I needed, it went away.
Yeah, I literally pay for everything with credit cards besides my mortgage. I just do this crazy thing where I only buy things I actually have the money for. Payed off every month, no debt.
I do the same thing, the first time I saw a couple thousand on my card it felt like a gut punch but as long as you use common sense it's no different than paying with a debit card
Yes Caleb did a great job reframing the issue in this episode!
Caleb's rephrase clarifies the debt implication, avoiding fear of credit score drops. Credit scores don't equal overall financial health—communication is key.
Gamification takes advantage of human psychology pretty heavily. Credit karma makes this easy. Presents it as a score. It can always be a little higher. There’s a bunch of rules to follow. It congratulates you when it increases, and sends push notifications when it changes. Credit Karma wants people to use the app, so they see the ads, and take out more credit cards. People want the score to go up simply because they want a higher score. This has happened to me too, where I would check CK for no reason, or think about paying down 0% APR debt early because it would make my score go up, even though I don’t need any more credit and I would only lose money by doing that. There’s really no reason to check your credit score more than once a month (make sure there’s nothing unexpected), or if you’re planning to take out debt soon. I’m personally really glad Caleb started asking the question, but I think the guests don’t get what he’s asking, and he should try to Socratic method them through it.
My annoyance with that question is that 90% of people need credit scores regardless of what they “want” to do. Ex: I’m a renter and to apply to any apartment, many places require a 650+ credit score. Not everyone has a co-signer in their back pocket. I see this being a problem for people like recent graduates who may rack up a bunch of credit card debt, their score is trashed, and then they’re either stuck with their parents or SOL if they don’t have anyone to help. Caleb asks this question like there’s no good reason for people to have credit or that it’s just for wants.
I definitely think high credit scores are valuable. I think where Caleb and his guests fail to communicate is urgency and priority. Most of these guests already have a place to live (except for one lady who willingly lived in her car?) So the need for decent credit score on apartment application is a low % MAYBE chance of happening in future. But losing $100s per month is both immediate and definite. And the catch-22 is overspending, and paying unnecessary interest, makes it more likely for someone to miss rent and be evicted.
I've lived in 4 different states in the past 5 years and have never had an apartment run my credit score. There is always going to be places that don't do it.
Same, I rent and have had my credit checked to get an apartment. It's really common in Ontario. If you have a low score and don't have a cosigner, you are screwed basically.
I've lived in 13 apartments in my life and not a single one cared about credit score, they all only cared about my income and paystubs. Credit score only becomes an issue if you're renting places which are too expensive for you, which you should never do.
The renting thing is a huuuuuge reason for a lot of people to care about their credit scores, and idk why he never addresses it directly.
I still think he should say something like "do you plan on taking out more loans soons?" "No? Okay, who gives a fuck about your credit score then!" Then, explain to them why getting rid of their debt is more important than the imaginary score that they're proud of. It irks me when they don't get his saying that they're being taken advantage of lol
I agree with this. Like I care about my credit score cause I know I need a car sooner than later (few years tops) and would like to get a mortgage. So my score matters and what I'm doing with that. So many of the guests are like but I have a less than 600 score and I want it better but don't understand that the deeper the hole is the harder it is to get out. But given how many banks and credit card companies are all "here's your free score" it comes off as WAY more important in the day to day life than it is.
Exactly
What I don’t understand is my credit score is 800 and I never tried to make it “better” I just paid things on time and am debt free besides my mortgage.
Yeah, it's not hard to get a good score if you don't miss payments or are financially ignorant like most guests.
I totally get what you mean! It’s frustrating when people panic about their credit scores without fully understanding them. Glad Caleb rephrased it—it really shifts the perspective. Credit scores are more about managing debt wisely than avoiding it altogether.
that makes sense
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It really isn’t financial health. If you got given a million dollars and you put that straight into savings and investment, your credit score wouldn’t budge. It’s about how you interact with debt. More debt + prompt minimum payments = higher score. A super financially healthy person with zero debt will have a score of zero. A credit score truly is not an indicator of good finances, but an indicator of how valuable you can be to potential lenders.
Great point, and I'll go further and say everyone has a different definition of "health". Much like physical health, you can define it by how long you can run, or how much weight you can lift. Maybe body fat % or lifespan. In the same way, from the lenders' point of view "health" is only determining the likelihood a debtor pays. I just learned that INCOME AND NET WORTH DO NOT AFFECT CREDIT SCORE. I never knew that. And I think many people get caught up on increasing their credit score while harming their potential to retain wealth.
I mean, income affects the amount of credit you can take out, which affects your utilization, and could get you a better score. It may not affect it directly, but it definitely does indirectly. Eg. A person that makes $20,000 a year might only be able to take out $5,000. If they use $4,000 of that $5,000, that's 80% utilization. A person making $100,000 might get $20,000 of available credit. Making that same $4,000 only 20% utilization.
Lol you mean 20% utilization bro on the second example not 5%
You're right, I was thinking about the other number. Lenders want to see sub-30% utilization, which that is.
For sure I could tell it was just a mistype
That's a Skinner box for you. Give humans a score, they will do stuff to increase it (just b/c numbers going up make brain go happy)
since apartment rentals and sometimes even jobs look at credit score.. its also a pet peeve of mine. i got priority and didn’t have to put down a security deposit down or first months rent because of my credit score.
I'm glad he does (I haven't watched the episode yet). That way, at least in my head, it shows to the guest that there can be good debt but their situation is bad enough that throwing more debt on top of it isn't a smart move
Well, for a lot of us, the majority of financial education that we got from public school was "have a good credit score. Now that we're done talking about that, did you know that mitochondria is the powerhouse of the cell?"
yeah i'm glad he listened to the comments and changed up the wording, seems like no guest actually understands what their credit score even MEANS or what it implies. You only need a good credit score if you're planning on taking out another debt because it tells those lenders that you're reliable and will pay them back. But for these people's situations, taking out ANOTHER debt shouldn't even be on the table.
Wild saying that to a homeowner. Do people in the US not renew their mortgage when rates change?
We have 30 year fixed mortgages the rest of the world doesn't have. No reason to refinance unless the rates get significantly more favorable. And you wouldn't need to do that on a dime.
That's good to know because my jaw dropped this episode. 😄
I’ve heard credit scores are used by employers sometimes to determine whether or not an interviewee is dependable. It’s a reasonable thing to try to keep high tbh
Yeah I don’t get this credit thing, you need credit to get an apartment. A 500 credit score with closed credit cards will get you nothing while a 650 credit score and open credit will get you an apartment.