Now that you know how your credit score is calculated, it should be obvious that you have to have credit to have a good credit score. If you live on a cash-only basis, there is absolutely nothing for the credit score formula to use to calculate your credit. With nothing to go on, lenders will consider you high risk and this will result in you paying higher interest or not being able to get a loan at all.

Please don't take this as advice to live on debt. As you saw in the previous section, paying interest does not help your credit score, but having a responsible credit history does.

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