Why Credit Scores Are Important
Credit ratings have taken on greater importance than ever, and this applies to all forms of credit, be it in acquiring a credit card or getting a mortgage on that house. How to get a credit rating is still often unclear though, with many believing credit cards to be the only option.
As of 2001, there were still as many as 25% of American households that did not own a single credit card. Great news for them, and probably cause for the 15% of the population that owns a ridiculous 10 or more cards to wonder what the heck they were thinking.
The truth is that credit cards have taken on much greater use and importance in our society, leaving those 25% clearly in the minority. The original appeal of credit cards was of course the additional stream of money it gave you, plus the ability to avoid carrying around cash, or at least as much cash. In current years an additional lure has been the capability to buy products on the internet. Recently though, debit cards can just as easily be used to make purchases, and there are other methods can be utilized to make online purchases, such as Paypal or prepaid credit cards that reduce the danger involved with getting an actual line of credit.
The truth now is that credit cards aren’t the convenience they once were, but people have become hopelessly stuck to them as their finances have become tangled up in their web. If you can’t guess why the majority of those 15% of people with 10 or more cards needed those additional lines of credit, you’re probably not thinking hard enough.
How we all got sucked into this web might have been the greatest marketing ploy ever or a complete stroke of luck. Initially cards were reserved solely for middle and high income earners, and were seen as a great sign of prestige. Everyone wanted a credit card, and with the risks and calamity that would follow in their wake not known at the time, there was no hesitation on anyone’s part to get one. It was basically ‘free’ money, what more could you want? Sure you’d have to pay it back, but it in nice little monthly installments that wouldn’t cause anyone problems.
It seems like overnight credit cards went from being prestigious to being dime-a-dozen. Everyone soon had cards, and multiple cards at that. The glorious days of free spending consumers charging everything under the sun to their cards were here. But lo, those halcyon days weren’t to last, and indeed would soon turn to a nationwide storm.
Yet even as the word finally began to emerge about the evils of credit cards, soon credit reports began gaining prominence, and the idea that without a credit card, your hopes of ever getting any other line of credit, namely a mortgage, was trim.
The truth though is that credit cards are by no means necessary for establishing a credit history. Sure, the alternatives, such as school loans, vehicle loans, or any other type of product on lease, come with interest fees of their own, but these are all one-time deals, and not permanent baggage that can be all but impossible to get free of. Having any of these alternative credit scenarios on your report will also function precisely in the same fashion credit cards do.
You can access your Equifax report at any time and find out just what is contained within, and whether you might need some form of credit to have any hopes of attaining a mortgage or similar line of credit in the future. You don’t need to jump into the credit card fray and risk drowning in its depths like so many others.