Your credit score defines you financially. Establishing and maintaining good credit will make your life infinitely easier.

The first step to establishing a good credit score is to take out a loan or apply for a credit card. Don’t get carried away and blow your credit score by exercising bad money habits. To establish a good credit score you must make your payments on time and in full every month.

Victor Benoun, a mortgage broker based in Studio City, Calif., stresses the importance of having a good credit score.

“Credit scores have become a real important item,” he says. “It’s really a hot button right now, because it’s a measuring stick, basically, of how you will repay your debt.” When you apply for a mortgage or a loan, lenders will look at your credit score, and if it’s good, you’ll get a better deal on the loan.

You can also improve your credit score by minimizing your debt. The more debt you have, the lower your credit score will be because your debt-to-income ratio will be off as will your debt-to-maximum-credit-available ratio. If you make extra payments to bring down your total amount of debt, your credit score will go up.

“It’s a very good idea to take out a loan if you’ve never had credit before.” Benoun says. “Apply for a credit card, apply for some type of installment debt to start establishing a credit history, per se.” That will help you to establish a credit report and credit score.

Fear of debt shouldn’t stop you from taking out a loan to help your credit score. To establish a good credit score, you have to show that you can borrow money and pay it back on time, whether that’s a credit card or a mortgage. Every time you pay a bill on time, you’re building up your credit score.

In the current market, to get a good rate on a mortgage, you’ll need a credit score in the high 600s. If you’re irresponsible with your credit score, it will end up costing you more money in the long run.