Credit is Also Good -- Advantages of Getting Loans
By Mommy Donna and Kib - March 18, 2021
Some people are allergic to credit cards. They feel that credit cards would tempt them to buy things and would make them drown in debt. They are more comfortable paying for their items in cash.
However, if you would notice, people in First World countries are using credit cards more than cash. They would even find it weird when they see people paying in cash rather than using their credit cards.
There are lots of reasons why people use their credit cards more than paying in cash. Some people say that they do not like bringing a huge amount of cash when they shop. They also wanted to earn points every time they use their credit cards. It also serves as an emergency source of funds when they are short of finances. Credit cards can also be used to pay for online purchases.
Filipinos, on the other hand, have a negative impression of credit cards. A lot of Filipinos felt trapped because they were offered a credit card easily. An agent approached them at a mall and asked them to fill out an application form without submitting any financial requirements; a valid ID is sufficient to pursue the application. When they received their credit card, they have a tendency to use it without thinking of their budget, if they have enough money to pay for the bill. As a result, they will get a shock of their lives when they receive their bill and have extra money to pay for it.
The consequence of unpaid debts is mistrust and the difficulty in applying for a loan in the future.
Don't fret; you can still regain your credit history if you will be able to pay all your debts, but it takes a while to establish your financial stability.
I have been using credit cards for almost twenty years now. I never had a huge problem paying my credit card bills. I was able to maintain my credit status that at present, my credit line is huge enough for me to purchase a brand new car.
It all boils down to responsibility. At present, I still actively use my credit card when I purchase items on an instalment plan. I also use my credit card when I purchase travel-related expenses like plane tickets and hotel reservations.
Having loans or credit is actually good! Don't be scared to do so; as long as you can pay for it, then go for it! Even businesspeople borrow money to grow their businesses.
Here are some of the reasons why getting loans can also be an advantage:
It builds your credit history. In the United States, building a good credit history is a big deal. It helps in establishing your capacity to pay for bigger loans. In addition to that, having a good credit history can give you better deals when you apply for another loan, like getting lower interest rates or paying a low downpayment.
In the Philippines, getting a good credit history can also help you in getting good loan deals with your bank. It also helps in waiving certain requirements for a loan. In addition to that, good credit history can also be a factor for visa application approval in certain countries. So please, when you get a loan, make sure that you can pay for it, don't make a loan when you are not certain that you can sustain the payment for your loans.
It establishes your reputation in paying debts. When you are able to pay your loan on time, it also establishes your credibility. It also makes you a trustworthy person.
It increases your credit limit. When an individual has proven himself/herself that he/she is capable of paying debts on time, the company will see him/her as a responsible payer. With that, the company will give the individual an increase in his/her credit limit. While some people, they see this benefit as a lure, others will see this as a blessing as they can borrow more money if they needed it in the future. A higher credit limit is an indication of an elite status too.
It makes you qualified for pre-approved loans, like auto loans. When the financial institution sees that you are a good payer of short-term loans and you have a good banking relationship, the bank will offer you a pre-approved loan. You do not need to submit proof of financial capacity anymore, and actually, this is a good opportunity so better grab this. Pre-approved loans also have lower interest rates as banks regard you as a valuable client.
It helps you in getting lower interest rates. Like what I've mentioned earlier, if you have a good credit history, you will be included in the elite client list. The bank will offer you lower interest rates should you wish to borrow money and leaner payment terms.
It also gives you rebates and rewards. A good loan payer is also rewarded! The bank gives you perks like freebies and special product offerings because of the good relationship that you have established.
It gives you an edge on getting special promo rates. Not all clients get the best rates, so if you have proven your worth in paying your debts on time and regularly borrowing money, the bank will include you in their list of special promo rates should you be interested to grab it. For example, you will get the first dibs in booking airline ticket promos or booking a hotel stay with huge discounts, as long as you will use the credit card in paying for it.
See, not all credit is bad. It takes discipline and wise financial decisions in filing for loans. As long as you have extra cash to pay for the loan without sacrificing your budget for your basic needs, go ahead and borrow money.
