Question

Suppose that you have the option to buy an item with either cash or credit. Under which condition would you use credit?

A. if you don't want to pay interest
B. if you want to build a good credit history
C. if you like carrying a lot of cash on you

Answer 1

I believe the answer is: B. if you want to build a good credit history

Building a good credit history does not necessarily financially benefit you today. But, in case you need to make a large loan in the future (such as for buying houses or injecting capital into your business), the good credit history would make you be seen as a trustworthy creditors by the banks or other credit providers.

Answer 2

You buy an item with credit if you want to build a good credit history. Buying something with credit means that you are buying something with money you don't possess at the moment. Later you will have to give back this money and also pay interests for borrowing it. This means that the correct answer is B.