A long time ago, when I was getting ready to buy a new vehicle for the first and only time, my parents gave me this bit of advice: you always pay cash for your transport. Never buy a car on credit, it just isn't done. It took me several years to realize just how terrible this advice can be. I'm going to save you all that heartache now by explaining why buying a car or truck on credit can be one of the smarter moves you can make. In the next installment of this series I'll give you some thoughts on how to navigate the dizzying world of financing options.

We all come into this world with a clean credit slate. Some of us end up with great credit, some of us poor credit and some of us no credit. Maybe we just pay cash for everything, then one day we find out that we're a poor prospect for a mortgage because we don't have a credit history. Or we didn't pay attention and made some late payments on our credit cards, or maybe someone in the family was very ill or unemployed and we had to run up some hefty balances on our cards, all of which can ding our credit.

There are a number of things you can do to fix up your credit, including always paying more than the minimum balance, keeping your balance below 35 percent of your limit, and avoiding late payments but my secret lending source says there is one thing you can do that has the potential to really bump your credit score. My source, who we'll call Deep Thought, has twenty plus years of experience in the world of finance and his advice is quite valuable.

Lenders want to see a pattern of borrowing and paying back on a steady basis. I don't mean that they want to see you run up your credit card and pay it off every month. Anyone who is thinking about lending you a big sum of money over a long course of time wants to know that you've done it before. They want to see that you can borrow x amount of money and have it paid off in y number of months.

What's the best way to do this? You could buy something ridiculously expensive, like a pumpkin made of diamonds and pay it off over time. Or you could buy a car and pay that off over time. Deep Thought says this can raise your FICO score (the numbered rating system used throughout the lending industry) by as much as 100 points. With credit drying up you may be having trouble qualifying for a mortgage. By buying a car and paying with credit you might be able to bump your numbers high enough to snag the mortgage and get the house you want. It doesn't have to be a new car; a used car will certainly do the trick.

Things to keep in mind:

• Don't borrow more than you can comfortably pay back. You want to help your credit, not harm it. You also don't want to raise your DTI, debt to income, too high as this has an adverse affect on your ability to borrow. Work your budget out before you go car shopping so you don't crazy and come home with a gold plated Mini Cooper when you can only afford a used Hyundai.
• When you calculate how much you would like to spend on your monthly car payment don't forget to include insurance. If you've been driving a car that's paid off and has liability only you're going to need to set aside a larger chunk of cash as you'll need comprehensive coverage.
• Don't miss any payments. Make sure all your payments are made with enough lead time to give the lender time to process the payment. I went a bit mad with this idea and have my car payment deducted from my checking account every month. That way I don't ever have to worry about being late. The money comes out on payday so I just think of my paycheck as being smaller than it really is. Now, this could be a problem if for instance I was suddenly laid off my job (which pays me via direct deposit) so it's something I'd have to think about if my circumstances changed.