Good credit in today’s society has become almost as important as a good name, reputation or education. We have become increasingly dependent on our ability to borrow money. While twenty years ago most people would hardly use credit for anything other than a house, today we use credit to buy more and more things – cars, TVs, stereos, computers and even cell phones.

When you purchase a cell phone for $50 with a three year contract, you must realize is that you are actually buying a $500 phone and will be paying for it slowly over the next three years. This is why you can only get this type of contract if your credit is good. You will be asked to do a credit check if you apply for any type of loan, certain jobs and even a rental apartment. It is close to impossible to get very far in our society without a good credit score. Here are some tips on how to build and maintain it.

Even if you have tons of cash, one day you will probably need to use credit or simply prove your creditworthiness. It is probably a good idea to get a credit card and use it occasionally, even if you think you don’t need it. If you have never had accredit card or any type of a loan, getting started may be difficult. When you have no credit history, there is no way for the lender to know whether you will be a good borrower. The easiest way to start is by applying for a gas card. It will only work at a particular chain of gas stations, but almost anyone can get one. By using it regularly and paying you can build enough credit history to apply for a regular credit card in just a few months.

Once you have a good start, it is very important to keep it under control. While having too many credit cards is not good for your score, don’t hurry to close your cards, especially the old ones. Old cards are important for the length of your credit history and also reduce you overall debt to credit ratio. Never apply for several credit cards or borrowing accounts at the same time. This will be interpreted by the lenders as a sign of financial trouble and raise a red flag. Of course, always pay on time. If you absolutely can’t make a payment, make sure it is no more than thirty days late. Make sure your debt does not exceed 75% of your credit limit.

If you want to give a good head start to your children, get a low limit or prepaid card for them early and let them use it occasionally. Of course, you should remember that teenagers are the least responsible borrowers, but if you do it carefully, you will not only teach them very important habits, but also give them a long credit history which will make their adult life easier.

Nikolay Sisan is a Certified Financial Planner and freelance writer in Vancouver.