Consumers' credit profiles affect their ability to borrow and the interest rates they'll pay. And, lenders aren't the only people who use credit scores to make decisions – many insurance companies, cell phone providers and landlords, do, too.
Why you should establish credit
If you've always paid cash or used checks to make purchases, and haven't used credit, it's a good idea to start. And if you've had credit problems in the past, it's important to re-establish your credit history.
• You may need good credit for such routine matters as having the utilities connected to your home.
•Good credit is important to secure financing when buying furniture, a computer, a car, or even a new home.
• Employers often check the credit rating of prospective employees. A solid credit rating reflects positively on your ability to manage your job responsibly.
•Renting an apartment may be easier. A good credit rating tells landlords that you are a person who's more likely to pay the rent on time each month.
• If you need a loan, banks may look more favorably upon you if you have a good credit history.
What a credit card can do for you
Besides being a good way to establish a credit history, credit cards are very convenient. They allow you to:
• Buy items online, over the phone, and from mail-order catalogs
• Make travel reservations, purchase airline tickets, and rent cars
• Shop more safely by not carrying a lot of cash
• Budget larger purchases by paying in installments
• Access funds in emergency situations