Credit is an important financial tool. It lets you pay for items you could not afford with cash, such as a college education, a new vehicle, apartment furniture or a home.

You also typically need a credit card to make purchases online, rent a vehicle and reserve airline tickets.

However, credit can get out of hand if you are not careful. Poor spending decisions now can damage your credit reputation for years ahead.

Working to build good credit takes time, but it is worth the effort. This article includes information and tips to help you:

Get started with credit.
Use credit to improve your financial reputation.
Monitor and protect your credit report and score.

When you learn to use credit wisely, you can avoid credit problems and build a strong financial future.

You Need Good Credit

Every time you use credit, you are building a financial reputation — summarized in a credit report — that employers, landlords, future lenders and other businesses consider as they make decisions about you. Having good credit means you have a reputation for paying bills on time.

Good Credit Can Help You:	Poor Credit Can Keep You From:
Get the job you want. Obtain affordable insurance for your vehicle or home. Obtain lower-interest loans. Receive job-related security clearances. Rent an apartment or home. Purchase a vehicle or home.	Being hired. Qualifying for insurance or obtaining affordable insurance. Securing a loan for large purchases. Getting an approved background check by your employer or for the military. Having the apartment or home of your choice. Qualifying for an auto loan or home mortgage.

Keep In Mind

Credit is borrowing: using someone else’s money to buy something now with a promise to pay for it later. Using credit costs money. You have to pay the principal (the amount you borrowed), plus interest and sometimes fees.

When credit is used, there is a creditor (the person, bank, store or company that is owed money) and a debtor (the person who has to pay it).

Your credit reputation generally determines how much money you are able to borrow and how much it costs to do so.

More Than Credit

The way you handle money affects more than your credit reputation. Your spending and saving choices can increase financial opportunities or cause financial strain that may affect personal relationships, physical health, and school or job performance.

Establishing Credit

Using Credit Wisely

Monitoring Your Credit

Making Credit Count

Answers To Self Tests

Next: Establishing Credit

Updated Wednesday, January 17, 2007