Credit is a tool that is meant to be used as leverage to get the things you want and more importantly, the things you need in life.
Credit cards and lines of credits impact your credit score the most; however, to have an ideal credit report you want to have a combination of installment loans (car loans, mortgage, personal loans) and credit cards or lines of credit.
Your credit score is determined by the following factors:
This is important to know because it will help you to understand how to build and maintain excellent credit. This is the formula simplified:
Pay your bills ON TIME! -35%
Use your credit sparingly. -30%
Keep accounts open and in good standing. -15%
Have a balance between types of debt (loan & credit card) -10%
Do not apply for new credit account on a regular basis. -10%
Credit is the determining factor for approval for some of the most important aspects in life:
Income (Employment)
Shelter (Home Mortgage)
Transportation (Auto Loan)
Communication (Cellphone Service)
Financing (Loans/Credit Cards)
Remember credit is a tool. It is a very powerful tool that will either help or hinder your growth.