Building and Protecting Good Credit

Paying cash for everything feels responsible. To a lender, it can look like a blank page, with no history to show you'll repay a loan. Good credit isn't about owing money. It's about showing you handle it well.

Building it

• 1
  Start with bank accounts. A checking and a savings account you keep in good standing.
• 2
  Add credit slowly. One card is plenty to start. Store cards are easier to get but often cost more.
• 3
  Use it lightly. Small purchases, paid off in full every month.

Protecting it

• 1
  Pay on time, every time. Even a small late payment can hurt for a long while. Autopay helps.
• 2
  Pay more than the minimum. Minimum payments barely touch the balance while interest keeps adding up.
• 3
  Borrow within a plan. Know what you can pay off each month before you charge it.
• 4
  Check your reports. At least once a year, free, at annualcreditreport.com.

If something's gone wrong

Call the creditor as soon as you fall behind, before it goes to collections. Ask about a payment plan, and get any agreement in writing. A nonprofit credit counseling agency can help you make a plan. Credit recovers: steady, on-time payments rebuild it over time.