My son doesn’t want a credit card. I think he needs it.

Q. My son is 28, has cash on hand and no credit card. I’m trying to convince him to get a credit card to build credit for a future mortgage. We’re not quite in touch because he has money to pay for things so he doesn’t understand why he needs a credit card to borrow money.

— Try to help

A. We appreciate your trying to help your son better understand why credit is important.

His credit rating will play an important role in his financial situation as he gets older.

At some point, he’ll probably want to buy a new car, move into an apartment, buy a house or change jobs, said John Middleton, certified financial planner at Brighton Financial in Clinton.

“A credit score, and a reasonably good score, will likely be needed to determine potential eligibility for loans such as car loans or home loans,” he said. “Credit rating will also determine the cost of a particular loan.”

In addition to impacting the ability to borrow, credit score can also impact one’s ability to find suitable housing or employment, as some landlords and employers may require a specific credit score range for demonstrate reliability, Middleton said.

According to Fair Isaac Corporation, the company that determines the FICO credit score, our credit score is determined by our payment history, the length of our credit history, the amount of available credit used and the combination of credit, Middleton said. .

“So starting to build credit early is valuable as we get older,” he said. “A potential compromise here would be to start with just one credit card – you can review credit card options on websites such as NerdWallet – use the card regularly, but pay the outstanding balance monthly and before the due date. due date.”

This approach allows him to build his credit by establishing a credit history, a strong on-time payment history and showing usage while staying below full utilization of available credit, he said.

“As one’s credit score improves, the improved score can potentially help open doors to new residency and career options,” he said. “This approach also allows him to manage his finances as he does now while building and improving his credit score for future opportunities.”

Send your questions to [email protected].

Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Register for NJMoneyHelp.comit is weekly e-newsletter.

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