To build good credit, consumers should start with one credit card and be financially responsible by avoiding excessive debt. Taking on affordable monthly payments and paying off credit card balances within the month are sound practices for developing good credit.
Credit cards are one way to help establish credit, but they require responsibility on the consumer's part because it can be tempting to borrow up to the maximum limit. Too many new credit cards can have a negative impact on a credit score. Never missing a payment on a credit card and keeping low balances on cards can be good for building credit. Being responsible with money contributes greatly to building a good credit score, and one way to become financially responsible is to pay bills, such as utilities or cable, on time.
Auto loans or personal loans are other ways that consumers can help build their credit scores, if the payments are made on time. Although a lender might suggest a higher loan amount, the consumer should only take out affordable loans. Installment-type debt, such as buying furniture on a store card, is another form of credit, but having too many lines of credit can also have negative impacts as a consumer might have a difficult time keeping up with the balances.