To Have or Not to Have Credit- That is the Big Question!

man holding credit card

How many have heard someone yell excitedly, “don’t get credit-use cash.” You might have heard it from a friend, neighbor, or even a financial consultant at a seminar. I had attended a well- known seminar where the speaker had been adamant about not using credit and maintained that cash was the only way to go, BUT, they would take credit cards to purchase their books. Seems a little hypocritical. Many will also state, “credit gets you into debt.” Let’s be honest, for the most part, we get ourselves into debt. There are times that it cannot be helped. Emergencies happen in our lives and oftentimes you can end up in a vicious cycle with debt.

To have or not to have credit is a personal decision, but there are some reasons why you may want to start establishing a good credit profile:

1. You are on this blog and it is a good chance that you are considering a start-up business, funding a business or service or become an investor. Most often you will need to have collateral and/or a credit score. It is very hard to establish without one and even more difficult to establish without both. There is a slight possibility that you can acquire funding without either, but I have not encountered it.

2. Housing- You need a credit profile and score to purchase a home.  Just want to rent a home or apartment? They still look at a credit profile and/or credit score. After all, this helps them determine how credit worthy you are and they want to know if you will pay on time. One more detail to note, property owners can also pull from a special data bank to see if you have had an eviction.

3. Transportation- No matter the style of car you want, unless you can pay cash for a car (not always a bad idea), car dealerships will pull your credit report and score.

4. Employment- Statistics state that 40% of employers will pull a credit report prior to employment. This is an absolute must for security clearances for both private sector jobs and the military. If you do not have a positive credit profile, you may be passed up for a sensitive position or promotion.

5. Personal Loans-  Lenders will definitely pull your credit report and score.

6. Insurance- Homeowners insurance rates are based on many factors, but one of the factors that stand out as the “shining star” is your credit score. The higher your score, the lower your rates. The lower your score, the higher your rates. This same maxim applies to auto insurance.

7. Credit Cards- Of course you want the best possible interest rates. This will only happen if you have a very good to excellent credit profile.

As you can see, these are some very important reasons why you may think to yourself, “not cash only, but cash and credit.” Without both, you may be left out in the cold. This is not what you want. Don’t close the door to credit. A well- planned opening to credit can bring you what you need and maybe even what you desire.

 

Sharie B- The Mad Credit Myth Buster. www.GiveYourselfCreditNow.com  T: 888-250-8984

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