Poor Credit – Is It Really a Problem?

Learning to manage our money well is an important part of becoming a responsible adult. However, when we have a lot of credit available to us, the temptation to overspend is ever-present. Developing a poor credit history will harm our credit report. But does that even matter? How could it affect you in the future?

It is true that on a day-to-day basis, you may not experience many adverse effects from having poor credit. It is when you want to make a big purchase, such as buying your first house, that you may feel the effects. Buying a house usually involves applying for a loan. To ensure you are responsible with money, a lender will want to see your credit history. Poor credit history may result in being turned down for the loan.

Can you do anything to improve your credit report? The first thing you can do is request a free copy of your credit report. You are entitled to one once a year, and it will help you look at the areas you need to improve on. Another important step to take is to pay your bills on time. If this is hard for you, then it is a good idea to set up automatic payments covering at least the minimum due – this will help to avoid late payment fees. Finally, do not hold on to a lot of credit cards. Just keep a couple that you have the longest history with and cancel the rest, as many credit cards can give a lender the impression that you are irresponsible with money.