Credit rating is very important if you need to secure credit in the future. Having a good credit rating is dependent on creditors seeing that you can manage your finances well and that you are not late or miss payments to existing creditors. You would think that having no previous loans or overdraft would mean that your credit rating would automatically be high, but this is not necessarily the case.
Having a credit card can help to build your credit rating by showing creditors that you are able to live within your means and are able to pay your bills on time, this is known as building positive credit. There are many perks associated with having a credit card such as allowing you to deal with your cash flow enabling you instant credit to purchase items or withdraw cash, so very handy for emergencies.
This can also allow you to keep track of your spending, it is a good idea to file your statements so that you can look back over the year to see where your money is going. Many credit card companies offer incentives for having an account with them, and there may be introductory offers such as low interest rates for taking out a new card.
Purchasing items on your credit card can also give you added protection and credit card companies can deal with disputes for you if the item you buy turns out to be defective in any way.
There are also disadvantages to having a credit card and these usually relate to spending more than you can pay back. This can lead to fees being charged to your account for late or missed payments which can also negatively affect your credit rating. In the long run this can turn into spiralling debt which can be very hard to get back under control, especially when the introductory low rate period ends.
As such it is always important to constantly review your finances so that you are aware when your spending is getting out of control. More info: http://www.360financialliteracy.org/Topics/Credit-and-Debt/Credit-Cards/Advantages-and-Disadvantages-of-Credit-Cards
It is possible for anyone, wherever they live in the world to build up a positive credit rating. The key to having a high credit score is proving your ability to manage your cash. Having a higher credit score can lead to you getting better offers on your interest rate which results in you paying less interest on money loaned, this can add up to thousands of dollars.
The main ways to get a higher credit score include paying your bills on time, not allowing your overall debt to get too high or maxing out your cards. Don’t rush to close old credit card accounts, but use them occasionally for small purchases as this can help to build your credit profile.