Apply for credit only when you need it, bad advice?

[SRT4kid93]

I have seen the sentence "apply for credit only when you need it" several times. But isn't this idea kinda backwards? 

if you apply for credit only when you need it, that means you are going to be using that credit to pay for something you otherwise can't afford. 

I get life happens and sometimes you need to apply for credit that you need, but saying to ONLY apply for credit when you need it, isn't this generally bad advice?

[Varsity_Lu]

I have 5 credit cards, my wife has 4, but we only have them to get as much cash back as we reasonably can, reasonably meaning conveniently.  Each of the last two years we have gotten over $1k cash back from our cards.  In addition, we got over $1k in SUBs last year when we first got our cards.  We lived perfectly fine for over 25 years with out credit cards or loans, so no, we don't need credit. We're just using it for our benefit.

[JoeRockhead]

Context matters... where are you seeing this advice being given?

[Thomas_Thumb]

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@SRT4kid93 wrote:

I have seen the sentence "apply for credit only when you need it" several times. But isn't this idea kinda backwards? 

if you apply for credit only when you need it, that means you are going to be using that credit to pay for something you otherwise can't afford. 

I get life happens and sometimes you need to apply for credit that you need, but saying to ONLY apply for credit when you need it, isn't this generally bad advice?

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Yes it is.

I'd say establish a strong credit history long before you need credit. Acquire and use credit cards for that purpose. Just limit purchases to what can be paid in full every month.

You can pay cash for cars but, most people need credit to buy a house. Woe to those without a prior credit history. No prior history => higher interest rates due to unknown ability to manage credit.

[SRT4kid93]

@JoeRockhead 

I don't remember exactly but I have for sure seen it on articles written about credit. You know like a wallet hub or credit karma article or something like that. So in this context it would have been geared towards the general masses/the average consumer. 

But I know I have seen it multiple times and every time it just struck me as odd. It seems like the exact opposite of what we should be teaching. Except maybe in specific situations where someone may have no choice. 

[AndySoCal]

It is good advice as a rule. I currently have  5 credit cards will have six in a month or two. Those credit cards with their credit limits gives more than enough credit. If need be I could cut that number down to 3 credit cards.  You apply for an auto loans when you need another car and not before. As I say credit is a wonderful tool when used correctly it is a horrible master when it is not used correctly..  The horrible master is the twenty to thirty cents out of every dollar you pay if not more when you carry a balance month over month. I have a friend that used to spend every nickle he had and more. He financed the and more with his credit cards. Eventually due to life and circumstances he filed BK 7. He learned the lesson the hard way. Now he determined never to pay a penny interest on his credit card.

[FicoMike0]

Ditto @Thomas_Thumb 

Another thing, if you see yourself in a "life happens" situation, go out and get a personal loan at a reasonable rate, rather than run up a lot of credit card debt at high rate, jacking your utilization up so you can't get a loan.

[Minimalist]

If you have the right amount in cash reserves you shouldn't have to worry about ever needing credit.  Using it is one thing, having to rely on it to make ends meet is quite another. 

[crystal626]

I think advice like that is typically offered because the average person doesn't have the impulse control to use and pay in full and they get themselves deep in debt. In that situation it makes sense to only get credit when you need it (and again while it's easy enough to say to always have a cash reserve on hand so you don't have to rely on cards, ~60% of Americans don't have even $1K in savings for an emergency). 

[AndrewF]

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@SRT4kid93 wrote:

I have seen the sentence "apply for credit only when you need it" several times. But isn't this idea kinda backwards? 

if you apply for credit only when you need it, that means you are going to be using that credit to pay for something you otherwise can't afford. 

I get life happens and sometimes you need to apply for credit that you need, but saying to ONLY apply for credit when you need it, isn't this generally bad advice?

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Benjamin Franklin said it's better to go to bed without dinner than to rise in the morning with debt.

For the most part, I agree. Granted, it was simpler times, but probably the only kind of debt I may ever find myself in again would be a car loan, and on something where I can pay off the loan as fast as possible, which follows that it won't be a terribly expensive car.

I've had a car loan before and it was horrible. Even at 0% APR, it put a horrible strain on my budget and ended up heavily contributing to a Chapter 7 bankruptcy. I fell into the classic trap of assuming that there would be no changes in my life and my ex made changes to my life by leaving, putting me into a situation where I had to tell a judge I couldn't pay my bills.

If that can happen at 0%, it can happen to anyone at any interest rate because they don't make them lower than 0%, yet people still buy expensive cars on not a lot of income, at rates like 12, 17, or even higher.

My "better to go to bed with no dinner" is just driving a car that's kind of crappy that I don't owe on.