Do you pay your bills on time?  Every time?  If not, you really should.  Not just because it’s the right thing to do.  Pay your bills on time every time because that is the easiest way to establish good credit.  And good credit not only makes your life easier…it makes things less expensive.

For example, Sally and Betty are each buying a new (to them) used car.  Sally has great credit.  She heads off to the dealership pre-approved for a loan at 4% interest.  She borrows $15,000 at 4% and will pay $276.25 a month for 5 years for a total of $16,574.87 for that loan.  Total interest paid=$1,574.87.  Betty, on the other hand has bad credit.  She is lucky that the dealership is able to offer her financing at all, since she doesn’t have a co-signer.  But she is thankful to get the loan at 8% interest.  She borrows $15,000 at 8% and will pay $304.15 a month for 5 years for a total of $18,248.75.  Total interest paid=$3,248.75.  Betty will pay more than twice as much for the convenience of financing her used car because she has bad credit.

The cost of credit is only one of the many ways that bad credit will cost you more.  Want a cell phone?  You may have to pay a security deposit to get a contract.  Need to set up utilities in a new apartment?  You’ll likely have to pay a security deposit.  Need to find a new apartment?  You may need a cosigner to get a lease.  Have a car?  You’ll likely pay more for your insurance premiums.

Do you pay your bills on time?  Every time?  You really should!