With all of the apparent hassle that seems to come with establishing credit it may lead you to wonder if it is really worthwhile to spend your time and energy pursuing it. The answer to this is a resounding-Yes! Without credit in today’s financial world you will be severely limited on the purchases and decisions you will want to make to further your financial progress. In addition there are other benefits as well some of these are-
• Having established credit helps you become credit wise. This means you will have the knowledge to play it smart with your plastic. You will also know how to build good credit, how to prevent fraud, and how to develop and stick to a budget so that whether you are starting out or starting over you start on the right foot.
• Credit cards are also an important tool for achieving independence and financial freedom. When you use your credit cards wisely they can help you build the kind of good credit that makes it easier to reach your short and long-term goals. Some of these goals can be renting an apartment, buying a car, or even buying a house.
• Many insurers and potential employers are checking credit before offering insurance or even jobs. Without having established credit you may be limited on what jobs you can get or you may not be able to get the best insurance possible for yourself, car or home.
• Credit cards themselves can offer additional benefits. The first benefit of having a credit card is simply a convenience. Credit cards eliminate the need to carry cash but they can also offer many different benefits. The savvy credit card user will make sure that they have these benefits at the lowest possible rate and only have cards that are truly a benefit for their lifestyle. Some of these benefits can be:
Cash advances, discount purchasing programs for all sorts of merchandise, discounts on rental cars and hotels with advance reservation systems, flight insurance, buyers protection insurance on merchandise purchased and extended warranty programs, insurance coverage on rental vehicles, frequent flyer miles on selected airlines, (Cards that offer miles usually charge an annual fee), discount long distance telephone programs, cash back program on purchases and points awarded on all purchases which can be used to purchase merchandise or redeemed for frequent flyer programs.
Now that you know many of the benefits of having established credit you may be wondering-How many credit cards do I need to have? While financial experts vary in their opinion the general consensus is the more cards you have, the more tempted you may be to use them. Consider that when it comes to credit cards, more is not necessarily better. Having to many credit cards may make it to tempting to purchase items you can not really afford and will have trouble paying for in the future. As you are establishing your credit be sure to take the time to see how many cards you have. Look at the interest rate, credit limit and annual fee of each credit card. Again financial experts recommend that most people can get by with only 1 or 2 cards. Ask yourself-Do you really need $30,000 – $40,000 of credit availability? Do not be afraid to get rid of excess cards. Keep the ones which best suit your needs, whether it is the cards with the lowest finance charges or no annual fees. When you decide to cancel a card, cut it up, do not leave
it lying around where you could be tempted to use it again. But do not close your accounts since that can hurt your credit score.