Why Is Good Credit Important?

Good credit equals smooth sailing through many of life’s big purchases. Many people underestimate the advantages of having a great credit history, while even fewer understand the downfalls of having bad credit.  To put it simply:  Good credit history can open doors for you, while bad credit history keeps doors firmly shut.  To understand your credit standing, it’s first important that you understand the difference between good and bad credit.



What is good credit?
Having good credit is the best way to get good credit.  Sound confusing?  It’s really very simple:  good credit ratings are achievable by borrowing money from a credit institution, such as a bank or credit card, and paying them back on time and in full.  A good credit rating can affect almost every major purchase in your life — from buying a car to purchasing a house.  If you have good credit, you are more likely to be approved for loans at better rates, mainly because banks take note of your credit history in the approval process.  In addition, having good credit may help you land a job because employers also look at an applicant’s credit report as a way to judge a person’s responsibility.
So, now that we have determined that good credit is a refection of your personality, your integrity, and so on,  let’s take a look at the best way to get and keep good credit:

1. Be prompt: make payments on time – Keep to a routine for paying your bills on time. It’s a good idea to mail payments a week before they are due so they arrive on time.
2. Be generous: pay as much as you can – If you can’t pay off the entire balance, pay as much as you can and aim for more than the minimum amount.
3. Be smart: don’t spend what you don’t have - Avoid going over the credit limit on your credit card account.  Even though some credit companies allow this, it can look as though you have problems handling your account.

Bad Credit

Since we’ve established the significance of good credit, it’s important that we take a look at how bad credit can affect your life.
Having bad credit can really hamper your ability to purchase just about anything with credit — a home, a car, renting an apartment, qualifying for credit cards, and so on.  It’s not that hard to get bad credit and it’s even harder to rectify it once you’ve earned the title.  Bad credit ratings are the result of consistently not paying your bills on time, missing payments, or not paying your bills at all. 
Bad credit can be rectified over time by using your credit responsibly and paying your bills promptly.
How to protect yourself and your credit standing

• Once you get a new card, sign it immediately so no one can steal it and/or use it.
• Call the company that issued you the card and activate it immediately, as well as cancel cards that you aren’t using or don’t anticipate using.
• Keep all account information private.  Never give out your credit card number, expiration date, or social security number over the phone. 
• Keep your receipts and compare charges when your bill arrives. Report in writing any charges in question.
• Don't lend your card to anyone.
• Request a copy of your credit report at least once a year and check that the information shown on your report is accurate.  (source Federal Trade Commission)

Checking your credit report
It is a very good idea to frequently check your credit report.  There is usually a small fee for the service, but it’s worth it in the long run if you find discrepancies.
Below is the contact information for the three major credit bureaus:

• Equifax
  P.O. Box 740241
  Atlanta, GA 30374-0241
  1-800-685-1111 www.equifax.com

• Experian (formerly TRW)
  P.O. Box 949
  Allen, TX 75013-0949
  1-888-EXPERIAN (397-3742) www.experian.com

• Trans Union
  P.O. Box 390
  Springfield, PA 19064-03090
  1-800-916-8800