Fool credit expert Dayana Yochim has a wealth of helpful advice for establishing good credit. She says that 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 someday. Instead, channel all your anti-establishment efforts toward clothes, music, and body piercings. 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 such as 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 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. (Note that multiple requests within a short period will count as one request in order to not penalize mortgage-shoppers and the like.)
- 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, such as a mortgage.
Learn more at our nifty Credit Center. You can order your credit report at our Credit Center, and you can even check out our exciting new Fool Credit Card there, too. (Of course, learn more and shop around before selecting any new credit card.)