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Credit Is A Tool Not To Be Scared Of.

Used correctly, credit can be an incredible asset to your financial stability. Used incorrectly, it can be your downfall. The keys are knowing what to do with it, how and when to use it, and how to maintain it. While carrying debt can get you in to all sorts of trouble, using credit in the right way can actually open all sorts of doors and save you a ton of cash. Years ago, I was had over $20K in credit card debt, all of which was accumulated by purchasing stuff like CD’s, stereo equipment, vacations, and expensive dinners. On top of the debt I had, my credit score also took a nosedive, meaning I had to pay more for any borrowed money. It took me a very long time to pay that balance off, so since then I have been diligent about keeping card balances to a minimum. However, I do still use credit every month, and here is why:

  • Using credit responsibly shows other lenders you are able to manage debt, which means you have access to the lowest interest rates on things like auto loans and mortgages.
  • Using credit responsibly can make or break your credit score. While most assume this is only for used for getting a good loan, it can be used for other life events like renting an apartment. With a bad credit score, an apartment manager might not rent to you.
  • By paying most of my monthly bills on a credit card, I can keep my cash in the bank just a little bit longer and let the credit card company part with their money first.
  • I had airline miles rewards cards for years and got many free flights from them. Since I no longer fly, I now have an Amtrak Rewards card and rack up miles for free trips or upgrades.
  • By using 0% balance transfer offers correctly, you can effectively cut your interest rate on any debt while simultaneously giving yourself a jump on paying off said debt.


Photo from Shutterstock

If you are able to manage credit, it can be a tremendous tool you can use for your benefit. It took me years to get there, but now I am in control of credit and it is no longer in control of me. So when you are ready and able, do not be scared of credit – just learn to use it to your advantage.

Have you recently started using credit again after being in debt or taking a hiatus? Have any tips or advice to share with the readers? Please let us all know!


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Comments (4)

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  1. I say use credit cards– don’t let them use you . . .

  2. I think the operative term is “used correctly.” For a long time, I would not trust myself with credit cards. Only when I dug myself out of debt and realized that you do need to use them with restraint in mind did I start to utilize them.

    Used correctly, they can be a powerful tool in building your credit score and putting cash in your wallet.

    Again, only when used correctly.

    Good post

  3. Mike says:

    I actually use my credit card as my #1 transactional tool. I use it for all my purchases (even for a $1.50 coffee).

    At the end of the month, I pay my bill in full. Hence, I earn cash rewards while not paying interest.

    I wrote about this topic last week and comments from few readers were quite interesting:
    http://www.gatherlittlebylittle.com/2009/09/get-a-day-to-day-credit-card-and-make-money/

    I guess we don’t all have the same relationship with our little piece of plastic 😉

  4. Hank says:

    Maybe being just a little bit scared of credit cards is what we need to keep us on the straight and narrow path.

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