Credit, What is it good for?

Hey, guys.

I'm sure we've all heard of a Credit Score at least once, something that tracks and rates our Credit. But why is it so important? What can we actually use it for? Well, that is what we're here to find out.

First, what is Credit? To be honest, before I started writing this article, even my own understanding was vague at best. Basically, though, Credit is being able to borrow money, nab yourself some merch or get someone to do something for you and pay it all back later, plus a little bit of interest. I'd say one of the best example is the Credit Card. You use it to buy stuff and then later pay all the money back to the Credit Card Company when you get the bill from them. 

That's right. Credit Cards aren't your gateway to free stuff. You're just borrowing money from a company that expects you to pay them back, plus a fee. So why bother getting a Credit Card in the first place then? Well, we'll get back to that later.

Now back to the point of this article, the Credit Score. Like I said earlier, it's something that tracks and rates our Credit. You see commercials all the time talking about it and advertising an easy way to keep track of it, as if it's really, really important to do so. Well, it really is really, really important to do so. Why? Because a Credit Score shows a bank that you're someone they can trust to give lots of money to and then pay them back.

Say you want to buy your own house. You don't have enough money to your name, so you need to borrow it. And the best place to borrow money, would be the bank. Especially if it's a lot more than what you can get out of a Credit Card. But a banker isn't going to just say, "Okay. Here you go. One gajillion dollars to buy your house." They're really going to be like this: "Okay, so you want to borrow a lot of money from us. Hold on while I check your Credit Score to see if we can trust you to pay us back."

Now, to be clear, a Credit Score alone, does not affect a bank's decision to lend you money. Things like taxes, work history and bank transaction history also play a part. But the Credit Score is a huge factor. If your score isn't high enough, then automatically, you can expect your loan application to come back with a big N-O stamped on it.

So, yeah. If you're strapped for cash and need a loan, a good Credit Score goes a long way to getting you one.

But banks aren't the only ones who use Credit Scores to see if they can trust you. Landlords use Credit Scores too to see if they can trust you to pay your rent on time. Insurance companies use Credit Scores to see if you're worthy of better policies. Even bosses might use Credit Scores to decide if you're a good fit for a new job.

All in all, the higher your Credit Score, the easier it'll be to get some of the good stuff in life.

So, how do you get a high Credit Score? Where do you even start?

Well, for most people, it's getting a Credit Card. There's a nifty kind of Credit Card perfect for beginners or people who need to being their Credit Score back up: the Secured Credit Card.

The Secured Credit Card generally requires a down-payment which will determine how much you can use it. But play your card right, don't go crazy on it, pay your bills on time, and that needle in your Credit Score meter is sure to go in a good direction.

Well, that's all the advice I can give on the topic. Want better advice? Talk to a banker, someone who works at the bank. They're sure to know more than a certain millennial just going with the flow of life.