3 ms·

Good point. Using a credit card is important to establish credit. What's more important is NEVER GETTING INTO DEBT.

hugh 18y ago
What's the point of establishing credit if I'm never planning to go into debt? This is actually a serious question -- I've been in the US for three years and I haven't bothered to acquire a local credit card, so my credit report is completely blank. Are there circumstances under which this can come around and bite me in the arse?
- jobeirne 18y ago
  If you ever want to buy a house without having all the cash up front.
- cookiecaper 18y ago
  Credit is useful for a lot of things, and it's not likely that you'll _never_ need to go into debt. Credit is a tool that can be used properly or abused, just like anything else. It's important to have good credit ... even if you never plan on needing a loan, it prepares you in case a circumstance arises where it is necessary to obtain one, and it's just smart to have good credit established. Never spend money you don't have, just charge things to your card and pay it off at the end of the month (or carry a balance a couple of months at a time once in a while, some people say this improves your credit score, and some companies will get pissed and cancel your account if they're not making at least some interest). Then, if you ever need it, that credit history will be there, and it is often used for things besides debt. They generally check credit when you go to rent an apartment, etc. Some people are even checking the credit of job candidates now. It's good to have good credit history.
  - hhm 18y ago
    Never spend money you don't have, just charge things to your card and pay it off at the end of the month Isn't a debit card better for that?
    - cookiecaper 18y ago
      A debit card doesn't count as credit in most cases.
      - hhm 18y ago
        Wouldn't using a debit card it be a better way of not spending money you don't have?
- jyu 18y ago
  Credit is useful for buying things you don't have enough immediate cash to buy, like cars or houses. It allows you to leverage, which is a powerful concept if used wisely. For a simple example, if you buy an investment property with a 20% cash down, and you sell it for 10% increase, then your ROI is 100%. Having a credit card is like having health insurance. Insurance allows me to reduce my risk of going broke. Hopefully you never have to use the insurance, and the average expected return may favor not having insurance, but the return is worth it. In the same way, having good credit and a credit card (even if you pay in full each month) allows you another option to get out of some sticky short term cashflow situations. The big difference between credit cards and health insurance is that you can use credit cards and keep your expenses the same, while health insurance is an additional expense. So you can spend the same amount with or without a credit card, but gain free financial insurance.

hugh 18y ago

What's the point of establishing credit if I'm never planning to go into debt? This is actually a serious question -- I've been in the US for three years and I haven't bothered to acquire a local credit card, so my credit report is completely blank. Are there circumstances under which this can come around and bite me in the arse?

jobeirne 18y ago
If you ever want to buy a house without having all the cash up front.
cookiecaper 18y ago
Credit is useful for a lot of things, and it's not likely that you'll _never_ need to go into debt. Credit is a tool that can be used properly or abused, just like anything else. It's important to have good credit ... even if you never plan on needing a loan, it prepares you in case a circumstance arises where it is necessary to obtain one, and it's just smart to have good credit established. Never spend money you don't have, just charge things to your card and pay it off at the end of the month (or carry a balance a couple of months at a time once in a while, some people say this improves your credit score, and some companies will get pissed and cancel your account if they're not making at least some interest). Then, if you ever need it, that credit history will be there, and it is often used for things besides debt. They generally check credit when you go to rent an apartment, etc. Some people are even checking the credit of job candidates now. It's good to have good credit history.
- hhm 18y ago
  Never spend money you don't have, just charge things to your card and pay it off at the end of the month Isn't a debit card better for that?
  - cookiecaper 18y ago
    A debit card doesn't count as credit in most cases.
    - hhm 18y ago
      Wouldn't using a debit card it be a better way of not spending money you don't have?
jyu 18y ago
Credit is useful for buying things you don't have enough immediate cash to buy, like cars or houses. It allows you to leverage, which is a powerful concept if used wisely. For a simple example, if you buy an investment property with a 20% cash down, and you sell it for 10% increase, then your ROI is 100%. Having a credit card is like having health insurance. Insurance allows me to reduce my risk of going broke. Hopefully you never have to use the insurance, and the average expected return may favor not having insurance, but the return is worth it. In the same way, having good credit and a credit card (even if you pay in full each month) allows you another option to get out of some sticky short term cashflow situations. The big difference between credit cards and health insurance is that you can use credit cards and keep your expenses the same, while health insurance is an additional expense. So you can spend the same amount with or without a credit card, but gain free financial insurance.