How good is your credit?  Have you taken your credit pulse  yet?
Most people are unaware of their credit rating and that's a dangerous situation to be in, especially when you buy a car, and car dealers will walk all over you, because they know more about your financial history than you do.  It should be the other way around.  If you are planning to buy furniture, a car, or a home, you could turned down if your payment history is spotty, or even for errors in your credit report.  It's the stupid little things like not getting the last utility bill paid when you move out of an apartment that keep you from getting credit later on.   Sometimes the bill does not get forwarded to you, now you have a charge off on your credit report for a late or unpaid bill.  Did you ever overdraft on your checking account?  It's probably on your credit report, and you should see about getting it removed.  Many people don't know that their salary is not up to date.  If you get a raise at work, who tells the credit bureau that you make more money now?  You have to tell them.

Like alcoholism, credit problems begin with denial.  A quick test to see if you have a credit problem is to ask yourself how much debt you owe your creditors, right now.  If you can't itemize how much money you owe your creditors off the top of your head, then you have lost track and are in the early stages of credit problems.

Take Your Credit Pulse
There is only one way to know the current state of your credit: Get your credit report.  Before financing anything it's a good idea to scrub your credit report.  Many people are afraid when they apply for credit because they don't know what's on their credit report or how it will affect their chances for a good deal at car dealers, for example.  Dealers use this to their advantage because almost everyone has a bad mark on their report, often erroneous.  How often does this happen: You get an erroneous notice from a credit card or bank saying "we never got your check".  You call them up, find out it's their mistake, no problem.  But many people are shocked to find out this error made it onto their credit report! My friend found 3 such errors on his report that kept him from getting a loan until he had them corrected.  Many errors can be quickly removed with a phone call to your creditor. Creditors such as auto dealers use these errors to charge you higher interest!  Experian (formerly TRW) used to give you your credit report free if you asked for it but they ended that program.  You are allowed one free copy of your credit report from any of the big 3 bureaus if you get turned down for credit, otherwise you have to pay $8 for it, no big deal.

What's On Your Credit Report
Your credit report has personal information, such as your Social Security number, address, date of birth, and employer.   It also lists your credit history from banks, credit cards, furniture stores, car dealers, and others.  Bounced checks, late payments, utility bills left unpaid will all come back to haunt you on your credit report. The report gives details of each account, stating if you have ever been late with payments, or delinquent, and lists the current status of each account, and the current balance.  Your credit report shows who has made inquiries into your credit report.   All those credit card letters you get?  Most of the companies ran a credit check on you to match your credit background with their criteria.  Then they mass mail to everyone matching the criteria.  Also found on your credit report is public records such as tax liens or bankruptcy.  Some credit reports even contain information on how you behave at your apartment complex.  When we screen potential tenants for our investment condos, we run a credit check that produces this information.  So if you pulled a Melrose at your previous apartment complex, this will make it hard for you to get approved for moving into another apartment.  Most condo homeowner associations require this background check on all potential tenants.

People With Bad Credit Or No Credit
How does bad credit hurt you?  Car dealers are notorious for walking all over people with bad credit, and not just with the interest rate.  They charge you 18% interest or higher, while the rest of us enjoy maybe 8%.  Many banks run credit reports on all new checking account applications, and if you have bounced checks in the past, you won't be able to open a checking account.  The fact that you shafted all of your creditors is coming back to get you.   Many cases of bad credit are due to bad circumstances, but most are from pure ignorance.  Don't live beyond your means! Plan your life with a budget that has a reasonable and sustainable payments, and has a positive cash flow at the end of each month. 

Go to the next chapter All About Credit Cards

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