When we are younger many of us pay little attention to our credit. Generally we're not making very much money, but we are borrowing quite a bit. At this point we usually aren't in a place to buy a house or take out huge loans, aside from student debt that is. So it's very common to make some errors that hurt our credit. Unfortunately, down the road we're going to have to deal with our past.

The effects of bad credit can be very costly. Lenders will look at our credit score to determine how likely we are to pay back the money we borrow. A low credit score is a big red flag. You may have applications for loans turned down or if approved at a very high interest rate. Another side effect of poor credit is the need for cosigner. It's one thing to have a parent cosign for a car at 20 and quite another to need a cosigner at 30. It can be quite embarrassing, and for other people it is just not an option.

The good thing is that you can turn your credit around. The amount of money you can save in interest is well worth any amount of time it takes to improve your credit. Just saving 1% or 2% in interest on a large loan can save you thousands of dollars.

It's important that you take the time and work on rebuilding your credit. The situation will not change unless you begin building responsible credit practices. The sooner you start the sooner you can begin enjoying the benefits of good credit.