Personal Finance: Good credit is hard work that pays off


By Christopher Hopkins

Some financial counselors will understandably insist that young adults eschew the use of credit. Too many of us fail to appreciate early the importance of good credit, leading to mistakes that can shadow us for years. But access to credit and its responsible use is actually very important as we move through life. A little attention now developing habits of disciplined borrowing and prompt repayment will pay huge dividends over your lifetime.

Roughly one fourth of American adults have no credit history at all, having never entered the traditional financial infrastructure. Of those who have a record, one third have a “poor” rating (FICO score of 620 or less on a scale of 300 to 850). That means that about half the U.S. population has limited access to important transactions like getting a mortgage or financing a car through conventional channels. Alternatives like “buy here, pay here” car loans and even payday lending are absolute last resorts, rack up huge interest and fees, and should be avoided if at all possible.

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