When teenagers use credit cards wisely and pay off the full amount of their bills each month they work on building good credit. Credit is a lifelong benefit to these students who are starting their lives. Many people believe that teenagers do not need to worry about building credit until they are older and have careers instead of part time jobs. This is a misconception based on past personal experience. Years ago, it was not necessary for teenagers to build credit as most transactions were done with cash and they did not need to get loans from banks until they were older and starting a family. However, nowadays that is not necessarily true. Cash is being used less and less with the greater convenience of credit cards. More and more teenagers are leaving home to go to college once they graduate high school and with this big move comes a whole new list of responsibilities such as getting an apartment if they are not going to live on campus. In the process of getting an apartment, teenagers are looking at a multitude of new bills as well as deposits. They must pay a deposit on the apartment itself, and many times a deposit to turn on the utilities from the city they are living in. With no credit these deposits can be ridiculously expensive. This is due to the businesses not wanting to extend their services when they do not know how good the consumer will be at paying them back each month. With no credit history a teenager is a complete gamble on the part of management. In my own personal experience, when I moved into my apartment, I had to pay three months of rent in advance because I had no credit. I was very lucky that I had that much from previous money management or else I would not have been able to get the apartment I wanted. There was also a hundred dollar deposit to get the electricity from the city into my name. These deposits can be overwhelming to teenagers who are living alone, or with just a roommate or two, for the first time in their lives, and is often an expense that is not considered until the apartment is already found. Having good credit drastically reduces the deposits that a teenager has to pay when moving out for the first time. Furthermore, when they become older, these teenagers will look into buying a house. With no credit or gad credit, the loan for a house will either be non-existent or have a very large interest rate. With good credit a consumer lowers the interest rate they will have to pay.
Image from: http://costity.com/
Image from: http://costity.com/