Credit: the good, the bad and the ugly

The good

A good credit history can mean lower interest rates, a job offer, or a desirable apartment.
Good credit gives you negotiating power. You can ask for better rates.
You may save on premiums with auto and home insurance.
Paying on time is the #1 way to get and keep a good credit score.
Your credit score indicates what level of risk you represent; the higher your score, the less risk, resulting in better credit.
Established credit may help you save with better offers and no deposits on utilities and services.
You can get one free credit report from each bureau every year.

Late payments are the easiest way to ruin credit. Call creditors and work out arrangements.
Too much debt can hurt you. Balances should stay to within 30 percent of total available credit. For example, keep the balance to $300 and under on a $1,000 credit limit.
Having too much credit will hurt you. Reject offers to increase your credit line limit.
Your credit score is lowered every time you apply for new credit.
Not having an established credit history can make it difficult at first, but be patient.
Not having different types of credit can lower your credit score. Have both loan and credit card accounts.

Defaulting means not repaying a loan obligation. In addition to adding high fees and fines to your charges, you ruin your credit score for the next seven years, or longer.
Higher interest rates are the penalty for bad credit. Just a few percentage points can cost thousands of dollars, greatly increasing the real cost of your purchases.
Bad credit can mean being denied new credit. If you are denied, you get one free report from that bureau that allows you to better understand why.
Creditors may not haul you off to "debtor's prison," but they can pursue legal proceedings that could result in garnishing your paychecks and putting liens on or repossessing your property.

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