Author: Hannah Henry
Published: Tuesday, 20 Mar 2018
Credit is like a car, it has to be built before you can get to where you want to go.
Unfortunately, the negative connotation of a credit card prevented me from my forward movement of building credit until I was in my mid-20s. In a way I was fortunate; my car was paid off, my family helped to pay for college and I was renting my apartment. I was living frugally-like my grandfather, whose financial advice was always "don't spend it if you don't have it".
As surprising as it may seem, my negative outlook was shared by the majority of my generational counterparts. According to a Bankrate survey, more than half (64%) of Americans between 16 to 36 don't own a credit card. Which sparked the question of "Why not?". Douglas Boneparth, president of Bone Fide Wealth and co-author of The Millennial Money Fix, states, "Millennials have been stigmatized by debt… They've witnessed firsthand the effects that mishandling debt can bring."
The idea of a young 20-year-old having a spending limit of a few thousand dollars would make anyone nervous! Which was why I was saving each paycheck for my future home, paying rent, and creating a monthly budget. That was until I had to take my dog, Finley, to the vet for an emergency. One doggie prescription, a massive vet bill and a “digestive condition” diagnosis later and Finley was back to his normal self. Unfortunately, it had cost me a decent portion of my first-home savings.
I turned to the two wisest people I know, my mom and dad. While they had their own credit card horror stories to share from their 20's, it turned out there was more to a credit card than just the "priceless" tear-jerker commercials. Most cards have perks like rewards, credit score reports, fraud/ theft protection, as well as my personal favorite-- budgeting tools, easily accessible on their mobile app. Not to mention, when used with self-control, they can provide a financial seat-belt for when an emergency strikes-- like an unexpected vet bill.
Cruising for a credit card online wasn't as easy as I thought. I didn't have any credit history which eliminated the majority of the options that were out there. At last, after swerving around the application barrier, I was ready to hit the credit-building highway. I submitted the online application form and a week later, I received my stylish blue card.
Today, it's been a little over a year since I started my credit journey. I am happy to report there haven't been any (emotional or financial) break-downs nor have I "totaled" my savings account.
Today, as I look ahead to the future, I realize the journey of building the necessary credit to be considered for a home loan will be a long one, but I know it will all be worth it once I pull into my own driveway.