Credit Cards – Smart Decision or Not?

Hello. My name is Austin Christner, and I am a NEXUS Peer Coach in my senior year as a Finance and Business Management double major at Indiana Wesleyan University (IWU). As I am both a NEXUS Peer Coach and a Business Major, you may be under the impression that I have my finances under control, but the knowledge I have gained has not been without a few mistakes along the way.

One of the things I would do differently if I could do it all over again would be to get a credit card sooner. “What?” You might ask. That’s right. I used to think of credit cards with a negative perspective, such as “they only cause overspending and temptation.” But I have learned there is much more to it than credit cards simply being evil. Credit cards are dangerous when they are paired with greed or a desire to live beyond your means. What I now see is that credit cards are a tool that God gives to us to test our stewardship with His resources. Romans 13:8 says this about debt, “Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.” The key phrase in the passage to me is “remain outstanding.” All debt taken on should have a reasonable plan to be payed back.

I now have two credit cards, for which I have had just over a year, that I use mainly to cover my expenses. To keep myself accountable, I have reminders set on my phone so I do not forget a payment. I chose to get the credit cards in order to build a good credit score as well as to reap the rewards that some credit cards offer, such as 1% cashback match. A good credit score can save you thousands of dollars in interest when applying for a mortgage, buying a car, and can even help getting lower insurance rates. Credit scores are made up of these factors…

  1. Payment History (35%) – percentage of payments made on time.

  2. Credit Utilization (30%) – average percentage of credit limit used each month.

  3. Length of Credit History (15%) – average age of all credit accounts.

  4. Credit Mix (10%)- variety of credit, such as student loans and credit cards.

  5. New Credit/ Credit Inquiries (10%) – only negatively impacts your score whenever new credit is applied for, such as new credit cards/loans.

The continued, responsible use of credit cards is one way to improve your credit score. My personal experience with using credit cards has improved my credit score by over 100 points! Email me at [email protected] to share your thoughts or schedule a meeting with me.