Often we meet clients who have little or no history of using credit – folks who prefer to pay for goods and services with cash or debit cards only.
While it might seem more responsible to not use much credit, it can actually pose a major problem when trying to finance a house, car, or other large purchase. Creditors like to see a strong history of credit use rather than a limited history.
However, there are other great advantages to using credit responsibly, including:
Lower Financing Rates
If you have a strong and deep credit history, you will get the best financing rates and terms when buying high ticket items, such as a car. Getting lower financing rates can save you thousands of dollars on these purchases.
Easier Cash Flow Management
Without credit, emergency situations in your household (such as needing a new hot water heater or air conditioning unit) become a major strain on your finances. Having a history of excellent credit, however, enables you to finance those emergencies at favorable rates and pay for them over time.
As you already know, your debit card is linked to your bank account and when you use it, you expose yourself to more risk. If someone steals your card or account number, they could gain access to your bank account. A fraudulent transaction on a debit card can require weeks for you to reconcile and get your money back from your bank. With a credit card, fraud is still inconvenient, but one simple phone call can shut down the card, remove the fraudulent charge from your account, and get a new card in your hands in 24-72 hours.
Let’s Talk Rewards!
Most credit cards will offer you the ability to accrue rewards points that can be used for future purchases, travel, or even cash back. Hey, if you’re going to use a credit card, you might as well get the perks that come along with it!
Don’t Be Afraid to Use Credit, or to Repair Your Credit
In today’s economic climate, you need to have credit, you need to use credit, and you need to have good credit scores. Without those three things, achieving “financial fitness” is difficult and often impossible. If you need assistance with your credit or if you have questions regarding credit repair, just give us a call. We’d be happy to set up a no-obligation consultation with you and answer all of your questions.