Living Without Credit

BOSTON (CBS) - Financial tips are everywhere; newspapers, magazines, TV and radio. Financial journalists and their editors love them. They make a great story. But often they are given without much thought as to how they may affect the consumer in the future.

To understand how what appears to be a good financial move can work against you, the National Foundation for Credit Counseling (NFCC) reviewed some tips to see if they would result in helping or hurting the consumer. I added my take on the tips as well.

Let's start with one issue many listeners have asked about; getting rid of your credit cards. I read an article that advocated living on a cash basis. It went on to say that you will never overspend or owe interest on anything you purchase.

But what the article didn't talk about was how are you going to rent a car, reserve a hotel room, or buy an airline ticket?

Going commando does have its virtues but at some point in your life, most people will need access to credit. You will need to create a positive credit history. And to do so, it is necessary to have at least one or two active lines of credit.

Without a credit history you will have trouble qualifying for a car loan, a mortgage or renting an apartment. Most of us will need to borrow at some point in our lives for we cannot save enough money for a house or a car.

One can learn to manage their credit cards and pay off the debt every month. We do hear lots about folks that get over their heads in debt, but what we don't hear about is the savvy consumer who uses credit cards as a money management tool. Building a positive credit history and score and getting points for the purchases they make.

The National Foundation for Credit Counseling (NFCC) is the organization I recommend most often to listeners whenever they tell me they need help with credit card debt. It has many local member agencies that it can recommend.