People use credit to purchase just about everything. Many people have credit cards to purchase their weekly groceries, pay for gas, or buying clothes. Credit cards can come in handy for people who do not have all the cash that they need on hand or have a few days until pay day and have to buy dinner.

However, credit is not just for people who don't have very much cash on hand to purchase something. Credit cards are sometimes used as convenience. Having a credit card can be safer than carrying around a lot of cash. If a person carries around a lot of cash it could get stolen or they could lose it. When a person is shopping online they need to use a credit card to purchase their items since they can't use cash.

Having a credit card can be a source of emergency funds for an unexpected emergency. Most people have had emergencies such as their car breaking down and need more money to pay for the repairs than what they currently have in their account. A credit card can provide this security.

Some people choose to use credit to pay for large purchases so that they don't deplete their entire nest egg. Some people use credit cards even though they have enough money so that they can build up a credit record.

Why is credit important

Credit is important for people to have for several reasons. One, it allows people to make purchases for things that they may need but don't have all the money for at the time. Two, using credit can help a person build up a credit record which will help them get more credit in the future. Three, credit is a convenience. Using credit can keep cash and savings safe from getting lost or stolen. Plus, it is possible for the savings to continue making money before it has to be used to pay off the credit card.

What is a credit score

A credit score is a number that pretty much grades and summarizes a person's credit worthiness. The score can range from 350 to 850, with the average score around 720. The credit agencies will not tell anyone how they determine a person's credit score. But a credit score is made up of different aspects of a person's credit history. Having a history of payments made on-time makes up about 35% of the score and the actual length of the history makes up about 15%. The longer that a person as a credit history and the longer they make payments on time, the better their credit score will be. The amount that a person owes is around 30% of the credit score and the smaller the person's credit relative to their credit limit makes their score higher as well. New credit and the types of credit each make up about 10% of the credit score. The larger the variety of debt a person can successfully manage, the higher their credit score. If a person has only a few number of inquiries about their credit they will have a higher credit score.

Why is a good/excellent credit score important

Having a good or excellent credit score opens many doors for people. If a person has a bad or poor credit score they will most likely not be able to get a loan for a car or a house. If they do get a loan, it will be at a very high interest rate. Having a high interest rate means that the person will be paying more money in the end. When a person has a good or excellent credit score they are able to get loans that they apply for with great interest rates. This will cut down their overall costs.