Why is having credit important?

Do we really need to have credit? Probably not, but establishing credit gives consumers financial opportunities they may not have otherwise.

When a lender issues you credit, they are giving you payment terms on a purchase so you can buy something today and pay later. Sometimes the lender gives you a payment plan.

Having the ability to get credit gives you security and financial flexibility. You never know when you may run into a situation that requires emergency cash. With credit, you can take advantage of sale prices on items that you don’t have the money for right now. To buy a home or a car, most people need credit.

Credit also gives you liquidity. You may have money tied up in a CD or some other sort of investment that you can’t access for awhile. You can use credit to make a purchase then pay it off when your money is available.

Travelers will find that travel agents, car rental companies and hotels require a credit card for a deposit. A debit card, a card that allows you to forego writing checks, isn’t allowed in these kinds of transactions. That’s true when you rent any equipment, camping gear or a even a lap top computer.

With the rising costs of health care, some people use credit to pay for their medical expenses. Although most hospitals will allow you to work out a credit plan, most physicians won’t. A credit card comes in handy in a medical emergency.

A credit card helps when you have to keep track of business expenses. A card that you pay off monthly provides a record of all your expenses.