Like my cell phone and briefcase, credit cards are such an integral part of my life that I forget what life was like before I had one. In speaking with some of my younger friends here in the University of Michigan Entrepreneurs club and elsewhere, I realize that a LOT of 18-20 year olds don’t have credit cards in their name. They should!
Capital feeds the business machine, and good credit will guarantee you access to capital. Conversely, no credit or a bad credit record will close off the pools of money that might otherwise benefit you or your business. It’s also worth noting that the entrepreneurial lifestyle is not without its risks, and in the event that your income stream becomes small (or nonexistant) for a few months, credit can help you pay the bills.
So I’d always tell someone to get a credit card at a young age. The credit limit will probably be $400-$500, and you should set some strict rules about using it. Spend only as much as you can afford and pay on time. Don’t look at your credit card as a facilitator for a lifestyle, but rather a tool that is building your credit for future business endeavors.
And in all of your credit-card spending, bear in mind my father’s very prudent advice: Don’t spend money you don’t have!