Imagine that you’re building a tower. The taller it gets, the stronger you need the foundation to be.

In the same way, establishing a strong credit history early in your life can help fuel future financial goals.

Is there any chance that, later in life, you’ll want to buy a car, own your home, or start a business? Having a positive credit history will help make these goals more achievable.

The lenders responsible for helping you get the money you need for these goals will look at your credit history and immediately know you’re a trustworthy borrower.

Enter responsible credit card use. Using your credit card well is one of the simplest ways to build your credit history.

Why is it essential to have a good credit history and a great credit score?

Glad you asked! Here are four reasons credit matters for you and your future:

1. Good credit scores unlock lower interest rates on credit cards and loans. This will save you a lot of money on future purchases.
2. If you have a high credit score, you have a better chance of getting approved for loans, credit cards, and rental houses or apartments. This will reduce disappointing denials for you.
3. Car owners with higher credit scores often score better car insurance rates. This will save you money on your monthly auto insurance payments.
4. People with excellent credit scores have more negotiating power. You may be able to ask for better terms on loans or lower interest rates.

Want to dive deeper into the logic behind credit scores? In our other resources, such as our guide, Understanding Credit: The Good, the Bad, and the Ugly, we talk more about how credit scores are calculated, the role of the three credit bureaus (Experian, Equifax, and TransUnion), and more.

Check it out for more information!

The benefits of credit cards can go even further than the basics we covered in the previous chapter.

Chances are, one of these three types of specialty credit cards (and their perks!) will pique your interest:

We’ve spent a lot of time detailing the right way to use a credit card. Here are some practices to avoid:

• Don’t overspend. If you only charge what you can comfortably pay off in full each month, you’ll avoid the vast majority of pitfalls associated with credit cards, such as high interest, late fees, credit score impacts, and potential debt accumulation.
• Don’t make late payments. Remember your payment due date and pay on time. Paying late can result in unnecessary fees and hurt your credit. Set reminders to pay on  time or enroll in automatic payments to ensure you never miss a deadline.
• Don’t just pay the minimum. If possible, try to pay your full balance off each month. Or, if you aren’t able to pay in full, pay down as much as possible. This will save you money on interest and help you avoid unmanageable balances in the future.