Living with credit

Why you should care about credit

Emily Crone

While credit is something that nearly all Americans will deal with at some point in their lives, many people are in denial about the importance of it. They don’t care about their credit rating and make one disastrous move after another. Or they don’t think they need credit because they are deathly afraid of debt, equating credit cards to leg shackles.

To those who don’t think they need credit or don’t think their credit matters much, let me prove you wrong.  Credit is used in so many facets of life. Having no credit or bad credit isn’t that different, since either situation can put a serious damper on more than just your finances.

Here are several ways credit plays into day-to-day life:
1)    When you are applying for car insurance, a credit check uncovering bad or no credit usually results a higher rate.
2)     Potential employers often run a credit check to ensure that you are a responsible person. This may not be a biggie for some jobs, but if you’re going to be involved in finances, you bet your bottom dollar your credit report needs to be spotless.
3)    When you want to rent an apartment, a credit check is run to ensure you have a good payment history. Have a record of delinquency? No lease for you.
4)    Want to visit Mom or your kids? Try renting a car without a credit card. Or buying a plane ticket.
5)    If you have zero or bad credit, your mortgage interest rate will be much higher than it would be if you had good credit. That’s a lot of lost money over time.
6)     Financing any big-ticket item such as a car, furniture and electronics requires a credit check. Bad credit gets you nothing unless you pay cash or a sky-high interest rate on your loan.

Credit bureaus are thinking of new ways to use credit. Next up may be a medical credit score for healthcare-related debt.

For those of you who have been a little careless, here’s some sound advice on cleaning up your credit rating.

Don’t think you can get through life without credit. You need it. For a long time I was in denial about it, and I even wrote my first blog entry about how it took me a while to come around and accept that credit and credit cards can actually be incredibly beneficial if used wisely.

In fact, that blog entry is currently featured on another personal finance blog, called Well-heeled, With a Mission. The blog author, Wanda, was looking for money stories from 20-somethings. I contributed mine and it is featured on the site. Check it out!

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