Even if you're a confirmed rebel, try to be as "normal" as possible in your consumer credit habits, especially if you expect to borrow for a house some day. If you can't ignore your anti-establishment inclinations, channel them toward clothes, music, and body piercings. But keep your spending and money management as squeaky-clean as possible.
Why? Because your credit score will affect whether you can get loans and the rates you'll pay on your loans. In some states, your credit record will even dictate your insurance rates and eligibility to rent an apartment.
Here are six small ways to keep your credit record clean:
- Pay your bills on time, especially mortgage or rent payments. Apart from extreme circumstances like bankruptcy or tax liens, nothing has as big of an impact on your credit history as late payments.
- Establish credit early. Having clean, active charge accounts established many years ago will boost your score. If you are averse to credit, on principle, consider setting up automatic monthly payments for, say, utilities and phone service on a credit card account and locking the card away where it's not a temptation.
- Don't max out available credit on credit card accounts. Lenders won't be impressed. Instead, they are much more likely to assume that you have trouble managing your finances. Beyond one or two credit cards, it starts to get complicated.
- Don't apply for too much credit in a short amount of time. Multiple requests for your credit history (not including requests by you to check your file) will reduce your score. If you are hunting around for good loan rates, assume that every time you give your Social Security number to a lender or credit card company, they will order a credit history.
- Be neat and consistent when filling out credit applications. This will ensure that all your good deeds get recorded in a single file, as opposed to multiple files or, worse, someone else's file. Watch out for inconsistencies in use of "Jr." and "Sr." If it gets ugly, remind dad that he already has his house.
- Check your credit history for errors, especially if you will soon be requesting a time-dependent loan, like a mortgage.
If you want to dig in right now, you can order a 3-in-1 credit report from our sponsor, TrueCredit. It gives you a side-by-side comparison of the information the three national credit agencies have on you.
Learn much more about how to manage credit and your credit rating in our Credit Center. And if you're shopping for a new credit card, give our Fool Visa card a once-over. We incorporated as many Fool-friendly features in it as possible.