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Should you take on debt to help your credit score?

Calculating your debt.

Imagine this: You've just finished graduate school and have gotten a great job at a top university -- but the future remains uncertain.

You've managed to escape out of higher education with relatively little debt -- just about $2,000 on credit cards and around $6,000 in student loans. You've just bought a new car with four-year financing totaling something in the ballpark of $19,000.

Should you eliminate as much of that debt as possible? Or would having a car loan for at least two years be beneficial to build your credit for an eventual mortgage?

Dan from California faces that situation. He wonders: "Are there types of debt that I should cultivate and keep open with some sort of balance for longer than a year in order to develop more credit for further on down the line?"

MSN Money's Liz Weston says typically the answer is no.

"If you have an active credit card that you're using, you don't need to carry a balance on that to help your credit," she says.

"You don't need to stretch out any kind of loan to improve your credit. Even after you close it, it's still going to be on your credit file for a awhile and contributing to your score," she adds.

Weston says that it's a misnomer that you need to be in debt to have good credit scores. "It is true if you're trying to improve really bad scores, sometimes it can help to go out and get an installment loan to add to the mix as well as a credit card that you don't carry a debt on," she says. 

About the author

Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money.
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Credit score is one of the most important financial tools today. It shows your ability to borrow and pay off debts. In case you borrow very responsibly, then your credit score is good or excellent, in case it’s hard to call you a responsible borrower, than the credit will be poor and it will be hard to get a loan. To get a good credit it’s necessary to borrow money and pay it back, because if you will not take out loans and use credits then it will be hard for the lenders to appraise your ability to pay off debts on time. But it’s worth to choose safe ways for building a credit, here’s a good advice in this article the way it’s worth to borrow money to get a good credit score with no extra risk.
Jen from https://paydayloansat.com/

It was mentioned that there are no "free" ways of getting credit scores. Often, credit cards or the credit bureaus themselves offer for-fee programs that have a trial period where you can view your credit score (possibly the FICO, but no guarantees). For most if you cancel before the trial period runs out, and you should be able to access your score for free or a nominal fee. For some, if there are issues, you may even get some money under their "protection" plans in that time.

My co-worker paid off all his debt, does not carry a credit card balance, does international travel. His credit score has been going down since he paid off his mortgage. Real facts do not seem to match the the advice from an expert. How about asking the credit reporting companies instead.

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