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10 Healthy Ways to Build Credit

Don't Mess Up!

One of the best ways to build good credit over the long term is to avoid the small and large mistakes that can stain your credit report for years.

Pay all of your bills, loan installments and credit card payments on time. Not only will you pay a fortune in late fees -- most credit cards charge over $30 for late payments -- but lenders will raise your interest rates for future credit [source: Willis].

Evictions are doubly nasty. If you're evicted, a collection agency will typically come after you for any back rent. That collection agency will report to the credit bureaus, meaning negative information will now be on your credit report for seven years. Evictions will also show up on tenant screening reports, making it difficult for you to rent future property or secure a mortgage on a future home [source: Sweet].

Avoid bankruptcy at all costs; it's the credit equivalent of poison. Bankruptcies will mar your credit report for 10 years. Above all, do your best not to cross paths with the law. Criminal convictions stay on your credit report forever (yes, forever). Even arrests that don't lead to convictions will appear on your credit report for seven years [source: FTC].

For lots more information on credit, debt and credit reporting agencies, follow the links on the next page.