No. I don't have a credit card and I have excellent credit. I have purchased cars and homes. I have had loans and paid them off. I do not have a credit card and have not had one since 1990 when I was married. I have never had one since I have been single.
"At my age and income I doubt that I'll ever buy anything more expensive than a refrigerator(I've got enough cash saved up to cover stuff like that). Could somebody please advise me? I am so confused and scared and worried -- this is all so overwhelming. By the way, I'm not in debt and never have been. Like an idiot I've always lived cash and carry. Thanks for any help."
You are not an idiot for always paying cash, but a credit card is a good way to establish a good credit rating. As pointed out above, the key is to pay it off IN FULL and ON TIME. The "on time" is crucial.
Where people get in trouble with credit cards is that it's easy to say "Oh, I'll just charge it" and then they find they've charged more than they can pay off on time and incur interest charges, and credit card interest rates are very high compared to home or car loans. Combine that with many credit cards and they get overwhelmed, or they lose their job, get sick, become injured - for whatever reason they don't have the money to pay back what they've borrowed. At that point they've got a problem.
If you're careful not to charge more than you can pay back IN FULL and ON TIME, you'll be fine.
I actually work in Credit and Collections. There is nothing to fear or worry about. A Credit Card is the easiest way to establish credit and has the potential to not cost you a dime.
Loans cost interest.
Most people don't realize that establishing Good Credit does not require a large dollar amount.
My suggestion to everyone who comes to me- is get a credit card. Any credit card-the %rate doesn't matter if you do this correctly and wisely.
All you need to do, is every once in a while, charge $25 on the card for whatever- gas, groceries, etc. When the bill arrives, pay it off ON TIME AND IN FULL.
Bingo...your credit is now being established. Do this a few times each year. And you are well on your way to your desired result.
I have counseled several people who successfully have reversed their Credit Score in a matter of a few years. It does take 7 years for all derogatory status to be removed from the Credit Bureau reports, but you can impact your score slowly and steadily.
If you have a mortgage or a car loan or home equity loan, those get reported to the credit bureaus also. Those are all loans that have to be paid on time, so they help establish credit.
Here is just a thought-Credit Unions can be great for advice, info., and better-than-bank terms on loans, etc. Many Credit Unions are now easier to get in to than they used to be. If you check around in your area, you may find a Credit Union you could join and then talk to someone there about the best ways to achieve your goals. Some are better than others though-for instance, we are members of the State Employees Credit Union and also Coastal Federal Credit Union, and we use Coastal for all sorts of things. They are by far the better of the two.
First -- all credit cards are not the same. The interest rates vary a lot, some have fees, others have airmiles and other bonuses. I use one that has a fairly high interest rate, but I pay off the balance every month, and so never incur any interest so that works for me. I find a credit card a great convenience. The one that I use all the time has no fee. My back up card is also a no fee card; I use occassionally as sometimes the regular one gets worn out or it demagnetizes or whatever, so it is nice to have a back up.
I think a credit card is an easy way to get a credit rating.
Why do you feel you need to establish credit? If you are going to make a large purchase on payments, it makes sense. To me, anything else, you don't need it to get by. I have a credit card, and I buy gas with it because it pays a reward that amounts to a discount on gas. I also use it to buy things online. That's the whole thing. If that doesn't apply to you, the heck with it.
I suggest you go to www.daveramsey.com. Dave Ramsey is a financial expert who has a talk radio show and a great website and books. He talks to average folks in plain language and, from what I gather, does NOT believe you need a credit card to establish credit. He's great and I catch his radio show whenever I can. Good luck!! Kathy
Yes, it is indeed very overwhelming to have your first credit card. I was told years ago that in order to establish credit, one does need a credit card. My DH and I are also debt free, have never been in debt and will never get into debt. We never incur finance charges because we pay the entire balance on our credit card. We do a lot of traveling and need a credit card for plane tickets, booking cruises, etc.
If you do any online shopping a credit card is necessary to make any purchases.
It's impossible to get an airline ticket or even rent a vehicle without a credit card. I hope that I've answered some of your questions.
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