Despite everything on the Internet you can read about credit, your plan for building your credit score and protecting your credit rating can be very simple. You do not need a large number of accounts. In fact, with a couple of store and credit cards whose balances you keep low or, better yet, that you pay off in full every month, you can build a score that would qualify at most lenders for their best interest rates and repayment terms. Additionally, one purchase a month, such as your cell phone bill or even a pack of gum, will build a history of positive activity needed for good credit.
You do not need to have a car payment. In fact, we recommend avoiding car loans because you are incurring a debt for something whose value declines over time.
Having one installment loan on your report over the past 10 years can also help, but limit it to a mortgage, student loan or business loan, since these are for assets or activities that increase your net worth or improve your ability to earn money.
Remember, since your credit score is attempting to predict your likelihood of missing payments in the future, it’s all about building a history of positive credit-related behavior. Your past affects your future.
Now, let’s wrap up this course with some housekeeping issues to get you your certificate.
