Good Credit
- do you have it? Do you want to have it?
Developing good credit habits at an early age in your financial life will save you much grief and trouble later.
For most young adults who still live at home this means the wise use of a credit card. When you turn 18 and have a job or go to college, you can get a credit card. The maximum you can charge will be usually $500 to $1000 dollars if this is your first card and is only in your name. However, you might be able to get more than one card and therein could lay temptation.
To have good credit means that you pay your bills on time. You pay -
- your phone bill
- your rent
- your utilities
- your car payment
- your credit cards
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"Many organizations across the country - such as banks, universities and retail stores - commonly use credit reports to screen potential employees."
- InsideCouncil.com |
on or before they are due.
You don't have to pay your credit card bill in full each month but not to do so can cost you much more than the original price of the item. Interest charges are much higher than the prime rate (the rate that banks charge their most credit worthy customers) and some banks are now using floating rates. As the prime rate goes up, so does the interest rate the bank will assess your balance.
Landlords, mortgage lenders look at your credit score to see if you are considered a good risk. Who wants to rent or lend money to someone who can not manage their personal credit? Some companies will check your credit report when they consider you for employment. And if your credit report shows that you do not manage your finances well, the employing company could conclude that you will not manage your duties at their firm.
So what's a young person to do?
Develop discipline in your spending habits. Use your credit card but try to pay off the balance before the bill's due date. Enjoy the freedom of not carrying cash (with the potential of losing your wallet and your hard earned cash) and yet be able to purchase that absolutely great bargain.
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