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Financial Literacy Cougar Money Matters

Good Credit vs. Bad Credit

Having good credit means that you are making regular payments on time, on each of your accounts, until your balance is paid in full. Alternately, bad credit means you have had a hard time holding up your end of the bargain; you may not have paid the full minimum payments or not made payments on time.

Factors that can cause Bad Credit include:

  • Late payments
  • Bankruptcies (these stay on your credit report for 10 years!)
  • Foreclosures
  • Collections

Negative information stays on your credit report for at least 7 years

The good news is that bad credit can always be improved. Practicing good credit habits can raise a low score, as well as help maintain a good score.





Building Credit

If you’re starting from scratch there are a few ways to build your credit:

  • Open a credit card: as a student if you are banking with a financial institution then they typically have a student credit card option. While these might not have the best interest rates and low credit limits they are a great resource when you’re just starting to build credit because they typically have a higher acceptance rate. You can also look into getting a secured credit card. While you do have to pay a deposit for this line of credit it can be useful in order to take the first step into building credit.
    No matter what type of credit card you decide on make sure you do your research on the credit card and know what kind of fees, if any, and interest rates are on the card.
  • Have a joint account or become and authorized user: If you have the resources and someone to help. Having a combined account or being authorized on someone’s account who has good credit history is helpful to you because the payments made on the account can potentially benefit your own credit score since it shows you are also responsible to payment made to that account.
  • Pay your loans: making payments on your student or car loans regularly and on time will help boost your credit as well. Showing lenders that you can manage your money will and are responsible in making payment will help raise your credit score.
  • Get a secure loan: there are specific loans out there meant to help you build credit. These are loans typically with a deposit and are not meant for long term use but long enough for you to build your credit.


Maintaining Good Credit

A good credit score is important for anyone to have. Building a solid credit history and maintaining a high credit score can have a dramatic impact on your quality of life now and in the future.

Things to remember to keep good healthy credit:

  • Monitor your credit report to ensure there aren’t any mistakes. Visit for a free report from each of the three major nationwide consumer reporting agencies once every 12 months
  • Avoid too many credit inquiries in a short period
  • Protect your finances! Keep financial records in order and always watch for fraud and scams
  • You don’t have to carry a balance on a card in order to build your credit
  • You can use your credit card and pay them off at the end of each month
  • It’s also important to always make sure you pay your bills on time and to make sure you keep your debt to credit ratio low
  • It is very easy to charge a credit card and think you pay it off later, but make sure you don’t spend outside of your means
Remember! It’s much easier to harm your credit than it is to rebuild it!