High unemployment rates, record debt and groundbreaking foreclosure rates: It’s understandable why so many people have turned their backs on credit cards and started paying cash. But abandoning credit cards can easily create a Catch-22 when you decide it’s time to take on more credit.
Americans thinking about making large purchases should understand that the use of a credit card is a critical component needed to build a strong credit score.
One advice seeker noted that she holds an auto loan, but stubbornly refuses to toil with credit cards. Her question: Can I still purchase a home? Answer: Not likely unless you suck it up and apply for a credit card.
Consumers should remember:
- Lenders want to see that you can manage multiple revolving credit accounts, while not overextending yourself or abusing your credit privileges.
- Proving to lenders that you can manage credit makes them consider you more creditworthy.
- Use credit cards for the helpful tool they can be! Charge small amounts and make sure you can pay off your balance in full.