Do You Know The Score?

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Do you know the score?

These days, it is nearly impossible to exist without credit, and a good credit score is more important than ever.  Companies such as cell phone providers, insurance & utility companies, apartment complexes, and prospective employers are all checking your credit score to determine their risk.  Low or no scores can cause you to pay more out of pocket or even prevent you from getting that job, apartment, or house. But is it smart to have a credit card?  Yes, if you use it responsibly!  

Credit cards, used wisely, can help you to build your credit history and score.  Used carelessly, they can negatively impact your credit and even destroy it.  Some ways credit cards can be beneficial are:

1. Credit cards are safer than carrying cash
2. They offer protection on travel and purchases that you do not get with using cash
3. They can help you manage your cash flow
4. Credit cards can help you to avoid and limit financial fraud
5. They can be used as an emergency fund backup plan
6. They allow you to pay for large purchases over an extended period
7. Most credit card companies offer rewards programs to save you additional money 

There are some risk factors that come with using credit cards that should be considered before you apply and get that new card.

1. Late payments are reported to the credit bureaus and will cause your score to drop and cost you expensive late fees and interest rate increases
2. Using more than 30% of your available credit limit can also work against you regarding your credit score
3. Credit cards are an expensive way to borrow money long term  
4. It can be easy to borrow more than you can afford to pay back
5. Credit cards can become a habit and enable you to overspend putting you in financial jeopardy

The bottom line is, having credit is a necessity in today’s world and using credit cards responsibly can be very beneficial to your financial health.  To learn your credit score, there are a variety of free services, including Credit Karma, Experian, Equifax, Transunion, and once a year at www.annualcreditreport.com.

You can learn more about the pros and cons of credit cards and their differences from debit cards by visiting consumer.ftc.gov. 

West Gate Bank does offer a Platinum Visa® credit card* that offers three options for earning points and rewards. To learn more and apply online, visit westgate.bank.

*Subject to credit approval.