All types of debt are not created equal when it comes to companies that score credit.
There are several types of debt and some can cause significant harm to your credit rating.
If you make your payments on time, an installment loan will not harm your credit rating.
An example of an installment loan would be a 30 year mortgage or an auto loan.
It is a loan where you borrow a fixed amount and then make payments over a fixed period of time until it is paid off.
You may have also heard them called secured loans.
If they are not paid back, then the bank or lender can take back the property.
A much worse loan for your credit would be a revolving loan.
An example of a revolving loan would be the use of a credit card to fund a purchase.
Credit cards have a higher interest rate typically due to the fact that the lender has no security.
The lender does not have collateral with your possessions purchased on a credit card.
They can't come and take your stuff away.
They can't come and repossess that big screen TV you charged or the vacation you took to Hawaii.
Additionally, the amount owed on a charge card changes month to month and the choice is yours to run it up to the max (which is awful for your credit).
Credit card loans are riskier to the lenders who issue them due to the fact that people default on them more often than they do a mortgage or car loan.
If it is essential for you to have a credit card, make sure and keep the balance below 30% of the total credit limit, and NEVER be late on your payments.
Missing a payment or even paying late just once can send your credit score on a free fall.