Credit is simply your financial trustworthiness. It shows your ability to pay. It can be determined from bill-paying history, outstanding debt, the number and type of accounts you have in your name, even the age of those accounts can be taken into consideration. All this information goes together to show your ability to pay, err your credit worthiness.

Good credit means that your history of paying bills on time has been good, you have steady employment, you don't have too much debt, or you don't have any outstanding monetary judgements against you. Good credit also means you get lower payments on home loans and car loans, and greater ease in obtaining credit cards.

Bad credit comes from paying your bills late, not only your credit card bills but also landlords may report you for paying late. Utility companies quite often send in a report of late paying customers to the credit agencies that collect credit data. A bad credit rating can be used against in many different ways. It can cause you to be unable to get credit cards, loans, apartment leases, even a job.

If your just starting out you may not even have a credit history and may find it difficult, if not almost impossible, to get a loan or credit card. Building a good credit history is not as difficult as it seems though. Many local stores will issue a credit card to someone with no credit history. Quite often you can even find car dealerships that will loan you money to buy a car from them. Once you show your ability to make your payments on time, major credit card issuers may be more willing to issue you a credit card.

You may be asking, why does any of this really matter...Because Money Matters.

About the author:
James Mercer posts articles of interest to those wanting to learn more about the financial world the runs their life Monday-Friday at www.becausemoneymatters.blogspot.com