Establishing and Maintaining Good Credit without Paying Interest

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It's generally accepted that a good credit score is a good thing to have. After all, it can be difficult to do mundane things like rent an apartment or even get water service at that apartment without good credit.

But what if you don't like debt? And what if you have enough money that you don't need to borrow money to buy a car or a house, and don't want to pay unnecessary interest?

Consider these ways to build and maintain credit without paying interest:

Use a credit card and pay off the balance in full each month. By paying off the full balance of your credit card(s) each month, you'll avoid paying interest on your credit card charges. But using a credit card and making timely payments helps boost your credit score. Just be sure you're using your credit card responsibly!

Leave old credit card accounts open. Even if you don't use them, credit cards that you've had for a long time can have a positive impact on your credit score. That's because the length of your credit history is one of the main factors used to calculate your credit score. So leave those old credit card accounts open, and just check them periodically to make sure no one else is using them either.

Maintain steady employment. Periods of unemployment can have a negative effect on your credit score, while steady employment has a positive effect. So, if at all possible, try to maintain steady employment to maximize your credit score.

Take out 0% installment loans and make timely payments. Timely payments on installment loans are one of the best ways to establish credit-worthiness. And it's occasionally possible to obtain installment loans with a 0% interest rate, so that you're not paying interest while raising your credit score. For example, sometimes car dealerships offer 0% financing on new cars. If you take them up on that offer and make timely payments on your new car, you'll be building your credit resume without paying any interest. (It's too bad no one offers 0% mortgages!)

Don't default on any bills. Whatever you do, don't default on any bills you owe, including medical bills, utility bills, and so on. While paying these bills on time may not increase your credit score, failure to pay them may very well lower your credit score if they show up on your credit report as a defaulted debt.

About Cathy

Cathy is the founder of Chief Family Officer, where you can get daily updates on the hottest deals, and tips to achieve financial freedom and family bliss.

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