The subject of whether or not someone should use credit cards or get a mortgage for a home can be a hot topic. I know a lot of people who are adamently against any kind of credit. My purpose in sharing on this topic is to share how this whole issue has impacted me and my family. I’m not saying this is the only way to go. But these are things that young people and their parents should be considering.
Both Tim and I were raised not to go into debt for anything. IF our parents used credit cards they had the money in the bank to pay for their purchase. Nothing was bought on credit. We were taught to discover the differences between needs and wants…and often had to go without things we wanted. God always provided for our needs and we certainly didn’t want to go into debt for something we only wanted.
Unfortunately in today’s culture a credit score is looked upon as a sign of someone’s character. Are they responsible? On time to pay their bills? Dependable? Unfortunately, exercising self control by waiting until you’ve saved up enough money doesn’t quite cut it. There’s no paper trail that you can point out to prove your honorable character.
When Tim and I signed the lease for our apartment, Tim had to give them a $600 deposit simply because we did not have a credit score. When applying for jobs, Tim was always asked for his credit score and while we don’t think that not having a credit score did not keep him from getting the job, he was told by his investigator it would have definitely helped. To get a loan for a home, a good credit score is helpful (although you could also show them utility bills to proved your dependability).
After “needing” a credit score on more than one occasion and not having one, Tim and I finally realized that we needed to do something about that. Our parents had taught us and been great examples of self control so we knew that we would only purchase something with our credit cards if we had the money in the bank.
So we began applying for different credit cards. And no one would accept us. Why? Because we didn’t have a credit score. (It’s really a vicious cycle!)
So…the only way we could get a credit card was if we had a cosigner or a secure credit card. And that’s what we ended up doing. We got a Best Buy credit card with a cosigner. We also were able to get a credit card under Tim’s parents and a secure credit card through Bank of America. (Basically, we had to give them a $300 deposit, which is also our credit limit.) With these credit cards we quickly built up our credit score. We only buy what we know we have the money to pay for. Instead of it coming out instantly from our bank account we just receive a bill every month.
It’s been an adjustment switching to credit cards. But has it changed our spending habits? No. We still exercise self control. We still only buy what we have the money for. The only thing that has changed is the time that the money actually leaves our bank account. And that is something we can get used to.
So that’s our story in a nutshell.