Why Do I Need a Good Credit History?

Establishing good credit means building a solid reputation for paying your bills on time. People who establish good credit qualify for loans to buy more expensive items such as cars or houses, as well as loans for additional education or training.

Plus, people with the best credit histories are usually eligible for some of the best interest rates available, which can save a borrower a significant amount of money in interest payments.

Your credit history also can affect your ability to be hired for a job. Many employers check prospective employees' credit reports and it's perfectly legal. If your credit report contains credit or debt problems, a company may choose not to hire you.

Landlords also may ask to see your credit record before they agree to rent you an apartment.

Working to build—and maintain—a good credit history takes time. But it's definitely worth the effort.

The best way to build good credit is to pay household bills, such as rent, gas and electricity, water, and telephone bills, on time. If you take out any loans or make purchases with credit cards, pay those bills on time every month, too. And try hard to make more than the minimum payment. When you just pay the minimum due, it can take months or years—and lots of interest payments—to pay off the debt.

To make it easier to keep track of what bills are due and when, fill out a Family Financial Calendar so you’ll always make your payments on time.

If you have a checking account, don't bounce checks. A history of writing bad checks will hurt your credit with the bank and other merchants. Plus, if you bounce too many checks, your bank may even close your account.

Also, writing bad checks is against the law!

Tips for Building a Good Credit Record provides guidelines for creating a positive credit history. The Minimum Payment Comparison Chart shows how much more money you'll spend by just making minimum payments.