Paying bills on time helps make you a responsible consumer. Nearly every bill you receive will have a due date on it. The company expects to receive the payment by this date. If your payment is late, the company may add a late fee to your bill. Here are possible outcomes on not paying your bills:

· Charged late fees that will need to be repaid ($10 or more)

· Have service cut off (electricity, gas, water, etc.)

· Pay a large fee to have service turned on again

· Hurt opportunities of future credit or loan applications

· Bad credit history report

As you can see, it’s much cheaper and more responsible to pay your bills on time. Always send bill payments at least one week before the due date to avoid any problems.

The CD Club sent Andy a bill for $27.50. Andy put the bill in a desk drawer in his room. He had not put in that many hours of work the previous month, so he didn’t have enough money to pay the bill. The next month, Andy got another bill from the CD Club. He still owed $27.50 for the CD. But the company charged him an extra $5 because he didn’t pay his bill last month. His bill is now $32.50. Forgetting about the bill had cost Andy $5. If this continues, this will also affect his credit history.

Credit Reports

Lets say that you would like to get a credit card or a loan to buy a car. The company will probably want to know if you pay your bills on time. To find out, the credit card company will check your credit report. A credit report tells whether you have paid your bills or loans on time. Each time you are late on a payment or have a credit card canceled, it is on your credit report. The report will also state if you have any unpaid bills. A business called a credit bureau collects the information about how people pay their bills. Companies might ask you to have a co-signer if you have not established any credit history.

How to Start a Good Credit History

You can start developing good credit history after you have maintained your job for at least 6 months.

Here is one way you to start establishing your credit:

· Apply for a credit card from a local store.

· Buy something small and affordable (But don’t buy more than you can afford)

· Be sure to pay your entire bill when it comes in the mail.

· Repeat process occasionally and make sure to pay off the entire amount on the bill.

At some point, you will probably want to get a loan to buy a car. If you have paid your bills on time, a bank will be much more willing to give you a loan. Credit reports are requested every time you apply for any type of credit or loans. People who miss payments or pay bills late receive bad credit reports.

Your credit record keeps information for seven years. It includes information you have given on credit applications, any inquiries from other prospective credit lenders, delinquent payment information (late or missed payments) and any collection action.