Good Credit vs. Bad Credit

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Difference between Good Credit and Bad Credit

In a perfect world, no one would ever have to worry about bad credit and the negative effects it will have on the finances. The world is far from perfect as you may have realized already and good credit is something that you will have to work hard to achieve. Both situations can have a significant effect on your future dealings and your ability to obtain financial assistance in the form of loans. Let's take a look at what goes into each, and how you end up with either good credit or bad credit.

Good Credit
Bad Credit

Getting It

In order to get good credit, you will need to be using the various credit options available to you. This means that you will have to borrow money or make certain purchases on credit at some point and you will have to show your ability to pay it back in a regular and timely fashion.

Bad credit on the other hand is incurred when you make purchase or borrow money and consistently fail to pay it back on time, or worse yet, fail to pay it back at all.

Benefits And Drawbacks

Having good credit opens up a wide range of opportunities for you with regard to getting more loans or better interest rates. This is generally a result of most banks and lending institutions being more accommodating to people that have shown the ability to manage their finances. In fact, good credit may even come into consideration when applying for certain jobs.

As for bad credit, there is absolutely nothing good about it, nor can any good come of it. Having bad credit closes so many of the opportunities that are available to people with good credit and it can make you ineligible for loans for a car or a home.

Maintaining And Repairing

In order to maintain your good credit record, you will have to use your credit cards, but you have to make sure to pay off the balance in full and on time. Simply paying off the interest is no good, as this can cause your finances to spiral out of control.

With bad credit on the other hand, the concern isn't how to maintain it, but how to get rid of it! It will take a lot of hard work to be sure, but with a combination of professional help, discipline and better spending and payment habits, it can be done.


Good Credit

  • Is earned by borrowing money and paying it back in full and on time
  • Allows you to borrow more money at more favorable interest rates
  • Shows banks and other lending institutions that you can handle money in a responsible manner
  • May play a role in your chances of being hired for certain jobs

Bad Credit

  • Has absolutely no benefit
  • Is incurred when a borrower consistently makes late payments or defaults on payments entirely
  • Prevents you from being able to purchase a car and/or a home on credit
  • Can hurt your chances of getting more credit, loans, or even of landing certain jobs

Which one best describes most Americans?
  • Good Credit
  • Bad Credit

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