Why Having No Credit Cards Is Bad For Your Credit

Introduction

You might not be aware of it, but not having credit cards is really bad for your credit rating. If you understand the process of credit rating and obtaining a credit score, you will realize the power of credit cards in achieving a credit rating that is not only just acceptable, but allow you to be successful in obtaining a mortgage, new car or even telephone service.

The power of credit is what many people are beginning to realize since the fall of many banks. If you do not have credit you will have to pay for everything in cash. This is okay if you have bags of cash lying around. In some instances, with no credit cards, you will still need a credit card to reserve hotel rooms, book flights or rent a car.

There is no escaping the use of a credit card. Even when you do not need one, because you have enough money, some companies require it for a form of identification or to place a deposit. When you go to rent a car, the rental company will check with your credit card company to ensure that you actually who you say. They will also hold your credit card number in case you decide to steal the car or returning the car without paying any additional charges. This is a difficult situation with no credit cards.

However, the greatest use of a credit card is when you need it to increase or improve your credit score. You cannot obtain much of anything else with a no credit score. Therefore, there is one of the things you will need to remember is that having no credit cards is bad for your credit. Here are a few reasons why.

Features

One of the main things a credit card can do is build your credit history. Actually this is a purpose that many people overlook. It is not about purchasing things or buying new items, but a small number of people get a credit card solely to build credit. This is because a lender or loan officer will check your credit history before giving any money. They will want to see if you can be trusted to pay back the money. They will do so by looking at how you successfully paid back the money lent to you on a credit card. Even if you are a trustworthy person, they will take what is written as proof of your ability to pay or not pay. Thus, with no credit cards, a credit card a company cannot really determine if you are trustworthy and diligent in paying your bills. You might be able to get character references, but this is not the same as them seeing your past history.

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