In December I received an email that contained a big credit lie. While much of the email was correct and things you probably already know, one item stood out to me like a sore thumb:

Credit cards, bank loans, car loans, and home loans are considered “good credit” and a mixture of different types is helpful compared to only a car loan.

I put this in red because credit cards are only considered good credit to creditors, NOT for you if you’re trying to create wealth.

You have probably heard me say not to focus on paying off credit cards because this does not lead to Complete Financial Choice®, but that is not what I am trying to say in this post.

Most people who read the above will confuse good credit with good debt. And those two things are not the same.

Good credit means you have a good credit score. Good debt is when you borrow money to invest and your return is higher than the cost of the money you are borrowing. An example would be to get a mortgage to buy an apartment building and the rents cover all your expenses, payments on the loan and give you a profit.

You already know things like credit scores are used to assess risk and determine whether you would be approved or declined for a mortgage, credit card, or car loan. The score is a numerical value ranging from a low of zero to a high of 850 or 900 depending on the credit bureau.

The higher the score, the better your interest rate would be and the more likely the lender believes they will be repaid in a timely manner.

Credit utilization is an example of one of the areas to be aware of to increase your score. It means how much of your available short-term credit have you used. If you use less than 30% of the available limit on your credit cards you’re okay; above that and your scores will likely drop.

If you are applying for a new mortgage, do NOT open a new credit card or get a new car loan. This can prevent you for being approved for a mortgage or re-finance, or increase your rate.

If you want to know how your credit looks, you can get a free credit report from all three major bureaus at

To Your Prosperity,