How Important Is a Credit Card?

Jackson Silveira |

Ever since my childhood I had always heard about credit and the importance of having a good credit score but I never really understood how to do so or why it helped. As I got older I kept hearing about credit, but getting a credit card seemed like a daunting task that wouldn’t benefit me a whole lot. Why would I want to use a credit card to buy things I didn’t already have the money to afford? It seemed like a pointless endeavor that would undoubtedly end up with me being in debt. Once I finally started asking more questions and doing research about the importance of credit and credit cards I began to realize how much this could help my life as I got older.

The importance of credit is far-reaching and impacts a lot more than I had anticipated. Do you want to own a house or a new car when you’re older? Your credit is going to play a huge role in the rate you get on loans to pay for your mortgage and car. Credit isn’t only limited to big purchases like that either, many cell phone companies check your credit before offering payment plans and some insurance companies also look at your credit before offering you a plan. This means that if you have a bad credit history you may end up not being able to get help with buying a house or car, or may be able to get help but at a far more expensive price due to higher interest rates.

After learning the true importance of credit I was determined to begin building my credit but I had no idea where to start since I had no existing credit and was in college. Being a student seemed like something that would make this process much harder but it turned out to be something I could use to my advantage. I began looking around online for the best credit cards and found out many companies offer credit cards specifically for students. These cards normally come with lower spending limits but also bring along lower rates and other benefits such as cash-back offers and no annual fees. They are designed to help college students learn financial responsibility while also being able to build their credit. Each card has different pros and cons so it is extremely important that you learn all you can about cards before deciding which one is best for you. Starting your own credit card seems scary at first, but if you find a card that fits your budget and needs this can be a really great way to start learning about financial responsibility while also setting yourself up for success later in life with better credit. 

If you want to build your credit but don’t want to open your own card there are other options such as becoming an authorized user on your parents card. Becoming an authorized user on a parents account gives you all the benefits of having a card and it builds your credit the same way, but it is less responsibility. Being an authorized user means you are not the one liable to make payments every month and that is still the responsibility of the primary cardholder. The benefit of this situation is that if the primary cardholder is diligent and responsible with their payments then your credit reaps all of the benefits of that, but if they are late or miss payments then that also gets added to your credit report. If you have a parent or someone in your life that you trust and knows is responsible with their financials then becoming an authorized user on their account can be very beneficial. 

Regardless of the path you choose, the importance of credit will always be there. Whether you want to make big purchases such as a home or car or even some smaller purchases like a phone, your credit will likely play a major role in what deals you can get and how much debt you will be in afterwards. Building your credit at a young age through responsible monthly payments and smart purchases can set you up for major success in your future.