Responsible Credit

Sometimes having credit can be a really awful thing. Why? You might ask? Well, when you screw up your credit, it isn’t easy to fix and it can be a dark cloud over you for several years to come. Actually it is up to 10 years now if you screw it up bad enough. This is why learning responsible credit is vital.

To get the 10 years you have to get some house foreclosures, maybe a bankruptcy or two, or even a car repossession. Normally the longest something stays on your credit is 7 years but even that is a long time. Can you imagine for 7 years not being able to buy a home, a car, or possibly even get a credit card or loan because of a couple of mistakes. It happens to Americans all the time, and that’s why at the age of 18 we all need to start learning a lot more about the one score that will affect us for years to come.

To begin with credit is something that should be our friend. And not just the friend that gives us money to spend either. Credit is our friend in a way that will help us be able to own a home someday. It will help us to show that we are capable of paying our bills on time and allowing us to some day purchase a vehicle without a co-signor. Although most people think credit is a friend, it is mostly because they can spend money they don’t have, and for some, even money they will never pay back.

There is a way to act like credit is your friend, just as if you were borrowing the money from your real best friend. When you borrow money from a friend and pay it back, you are showing your friend that they can trust you, correct? Well when you borrow money from a creditor and then pay them back you are showing hundreds of creditors that they can trust you. When you convince companies and creditors they can trust you, you will have all sorts of opportunities to make money and borrow money in the future.

Most parents warn their children not to get credit cards when they turn 18 and instead to just pay cash for everything they get. While this might seem like a good way to teach them, it is teaching them that they shouldn’t have anything they haven’t worked for. That could mean in the most extreme sense they would never get a car or a home, and it can be quite difficult to have a good job without a vehicle to get there.

Instead parents should be taking the time to work with their children and learn how to budget money, how to pay their bills on time and what things they should get on credit. A $500 credit card for an 18 year old won’t get them much, but it will help them build a line of credit that could mean the difference between having to co-sign for your child’s first vehicle or even their mortgage when they buy a house. Instead of avoiding the topic of credit, embrace it, and teach today’s children that credit is their friend and can help them immensely in life.