Are you one of the millions of Americans who do not have a credit history? While the idea of living credit card-free may sound like a dream, having no credit can, in fact, be as detrimental down the road as having bad credit!
Why is having a good credit history valuable? Major financial and lending institutions use credit history to determine the terms of major financial transactions, such as:
Credit Cards: Without credit history, when you decide that you finally want a credit card, you may have a harder time being approved for one at all! And even if you are approved, you will likely be saddled with a higher interest rate. On the other hand, if you have good credit history, you are more likely to be approved for a card and receive favorable terms. Many credit cards offer perks, including frequent flier miles and cash-back-rewards. Try to build a small amount of good credit now, so you can qualify for your preferred card down the road.
Housing: If you do not have credit, you may unfortunately have a difficult time finding housing. Many landlords run credit checks to determine if a potential renter is financially reliable. Landlords who do accept tenants without credit history may charge them more. For instance, you may be asked to pay a larger deposit or pay your first two months up-front. And if you plan to someday own a home, you will face a harder time qualifying for the properties and terms you want without a credit history to speak about your financial worthiness.
Borrowing Money: If you need to take out a loan, lending institutions use your credit history to assess what your interest rate will be. Loans can help you buy a car, make home improvements, or start a business. Avoid the long-term financial headache of high interest rates by using credit strategically and building credit history now.
Find out about other good financial building habits at www.syncis.com/blog.