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Why having a credit card may be important

On Behalf of | Oct 18, 2022 | Credit Repair

Your credit score and overall creditworthiness generally determine whether Illinois lenders will work with you. If you have no credit history or a bad credit history, it may be possible to use a credit card to improve your reputation. There are several reasons why this may be the case.

Establish a positive repayment history

Each time you make a payment in a timely manner, you prove to lenders that you can be trusted to handle debt. Therefore, they will be more likely to approve future requests for financing. If you have late or missed payments on your credit report, making upcoming payments by their due dates may make it easier to prove that you’ve overcome your previous credit issues. As a general rule, lenders look at your actions over the previous two years when determining if you are worth loaning money to.

Account mix is important

The presence of both secured and unsecured accounts on your credit report can help to increase your score. This is because it indicates that you will honor your debts even if you don’t have anything tangible to lose by failing to do so. A credit card is typically an unsecured debt, which means that you don’t need to provide the lender with anything of value as a condition of obtaining one.

A quality credit score may make it easier to get the best rates on loans and insurance policies. It may also help you get a job in fields that require you to handle money or valuable objects. A financial adviser may be able to help you learn more about the importance of a good credit score and how to earn one.