It’s back to school time and more and more people are looking for a credit card for students to help them start establishing their credit. During the application process, one of the main questions asked is, “Why do I need credit?” People assume that credit is a bad thing, and that it will just get them into debt. Sadly, that is sometimes the case with first time credit users like students. However, establishing credit while you’re young is more important than you might think-especially if you use it wisely.
Good Credit Provides Better Insurance Rates
First, when you purchase insurance, companies check your credit to determine what type of rate they want to give you. If you are a preferred customer with a high credit score, you will most likely get a better rate than someone with a similar driving record that has a lower credit score. This is because the insurance company trusts that you will pay on time and views you as less of a risk based on your financial responsibility.
Good Credit Helps You Secure Employment
Next, when you apply for a job, it is common for employers to run background and credit checks on potential employees. Those who have poor credit might be eliminated as possible candidates – especially from top jobs. They are seen as more risky because of their financial decisions.
Credit Protects You As A Buyer
When you pay using credit versus cash or check, you are better protected from fraud. Credit card companies make an effort to be extremely secured in their efforts. If something were to happen, the credit card company typically refunds you your money at their expense.
Good Credit Helps You With Renting
Furthermore, many people do not realize that their credit score has an influence on whether or not they can rent a certain property. If you are interested in renting particularly nice properties, you might find it more difficult if you have a low credit score. On the contrary, a high score makes it easy to rent anywhere and anytime.
Good Credit Helps You Secure The Best Interest Rates
In addition, when you are applying for loans, the better you credit is, the better your interest rate will be. This is particularly important when you are financing the purchase of a home or auto. You want the best rate because it will be the least expensive for you.
Credit Allows You To Finance Large Purchases
Finally, without credit, very few would be able to afford the things they have in life. Most of the large items people have such as their home and cars are financed using credit. This means that the individuals have gone into debt to afford these necessities of life. Although financing a large amount of consumer items on credit cards is probably not wise, sometimes credit is necessary. Otherwise, no one could afford a home. It would take years to save up the cash price of the home, and some might never make it.
Although you should never take advantage of credit, it is an important financial tool that can be managed to help people have a better financial life. Hopefully, you can safeguard your credit and enjoy the benefits that come from having good credit.