3 Reasons You Need Credit History and a Good Credit Score

In some corners of the personal finance landscape, going credit-free is considered to be something of a virtue. You only have to listen to the words of Dave Ramsey for a view minutes to hear the perspective that credit cards are bad and that cash is king. While that might work for people who already have a lot of money, it certainly won’t work for people who don’t. Much to the chagrin of Ramsey’s acolytes, you’ve got the play the game to win. And when it comes to personal finance, the game is credit. Here’s why.

credit score

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1.Using Credit Creates Your Credit History.

Without using credit, you’ll have no credit history. Without credit history, you’ll have no credit score. Without a credit score, no one is going to be willing to lend money to you because they have no idea how you’ll pay it back. You’ll need to borrow money if ever you want to buy a car or a house, or differentiate yourself from competitors for a job on the basis of your personal finance credentials. Fortunately, it’s no difficult thing to get credit history. All you have to do is get a single credit card and never cancel it (even if you never use it!). You can also put utility bills in your name instead of in one of your roommates. You just have to use borrowed money in some form, to take responsibility for the complex financial decisions of adults. Once you do this, your personal credit history has begun.

2.Good Credit Scores Improve Your Life.

Click through to learn about what credit scores are good and bad: https://www.crediful.com/what-is-a-good-credit-score/. For now, it’s enough to understand that a good credit score will give you more financial opportunities in life, while a bad credit score will hold you back. Let’s say you want to buy a house in a crowded market, as so many people are trying to do at the time of this writing. If you and five other people put in offers on a single house, even if you all have the same amount of money to pay down, then the differentiator will likely be the credit score. The house will probably go to the person with the best one.

3.Good Credit Scores Make Life Cheaper.

Lenders use your credit score as a simple way to understand how likely or unlikely you are to always pay back the money on time. If you have a good credit score, they’ll know that you’ll probably never miss a payment. This will cause them to offer you the money at a lower interest rate. Even a couple of points’ difference in interest can make a difference of tens of thousands of dollars over the course of an expensive loan such as a mortgage.

There are many more ways that credit scores influence life, but these three examples should give you a way to understand that creating a personal credit history is enough to improve your life and give you more opportunities.


Arnel Ariate is the webmaster of Money Soldiers.

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