Are Credit Cards necessary?

A credit card is one of those double edged swords. In the realm of credit you need one or two cards to maintain healthy credit scores. With the current FICO model, it is paramount that you have a minimum of one credit card reporting to your personal credit report. When it comes to getting a mortgage loan, the banks usually like to see 3 trade lines reporting good activity with 3 different creditors for the last 12 to 24 months. You can see how no credit cards or credit could affect your ability to get a loan.

The reason to have credit is to show creditors you have the ability to pay back your debts borrowed. When it comes to calculating your credit scores, it’s real simple. How much credit do you have? How long have you had it? How much credit is charged vs. limit of credit line? What is your credit history? With all of this being said, a credit card is a must to maintain healthy credit.

There however is a downside to the matter. Once you have a credit card you must be responsible with that card. It’s very easy to charge too much on credit card and get yourself in trouble. Credit Cards are not designed to buy what you cannot afford to pay off in a couple of months. When charging on a credit card, you should never charge more than you can afford to pay off that particular month. When you find yourself charging more than you can pay off that particular month, at that point you are heading down a risky road. The fees and interest on a card are high, and can get out of control once you have charged close to the limit a credit card company has extended to you. This is where most get in trouble real quick. With the FICO score model, you don’t want to charge more than 20% of the allowed credit limit.

Credit Scores decreased – When you have charged up the credit limit that was extended to you, the credit card company and FICO model consider you a higher risk. Two situations can result from this. You credit score can be lowered, along with your credit cards fee’s going up. You can see how credit cards are a necessary evil and how responsibility is a must. This is the whole basis by which creditors judge your ability to pay them back so in a nut shell credit cards are necessary, but they come with responsibility as well.

So with all of this being said, get your credit card today…….. your resource for credit.

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Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.