Should I Get A Credit Card Even If I Don’t Need One Just To Build My Credit Rating?

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Does having a credit card help build your credit rating?

Today’s question comes from Alfie in Nottingham:

“A friend has told me I should get a credit card to build up my credit rating even though I don’t really need one. Is this a good idea?”

MoneyBlog’s answer:

It’s a weird quirk of the financial world that credit is offered to people who have proved they can service debt. In other words, if you have shown that you can borrow money and pay it back on time, then when you come to need credit (need to borrow money), you’ll have an easier time getting it.

You may not need credit now, but for example, when you come to buy your first home and you need a mortgage, you will more than likely need to borrow from somewhere. And if you’ve never borrowed before, the banks get all jittery about lending to you, no matter how much you make in a year.

So your friend is correct in a sense.

However, be careful. Credit cards can introduce you psychologically to a world of seemingly ‘free money’. Which of course it isn’t. Never borrow more than you can pay back. It is MoneyBlog’s position that credit card interest should be avoided whenever humanly possible. (Which is pretty much always).

Paying interest on a credit card balance means your lifestyle is costing you more than it needs to. It’s also money you could have saved and invested. In which case the cost of paying interest in terms of future gains is exponentially large.

If you’re considering applying for a credit card JUST to build your credit rating and do not actually need the credit, you may as well take advantage of one of the many rewards credit cards available, and get something out of it.

There are loads of them on the market and which one you apply for will depend on which rewards will benefit you the most.

Hope this helps.

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