Building and Understanding Credit
Credit affects many different aspects of life. It can help you secure a loan, rent an apartment or even help as you seek employment. While most young adults understand the importance of having a high credit score, many do not know how to get there. Building credit can be tricky but we’ve put together a few tips to help you attain a healthy credit score.
Building credit can be tricky but we’ve put together a few tips to help you attain a healthy credit score.
- Pick the card that is best for you. There is no shortage of different credit cards to choose from so it’s important to research which card makes the most sense for you. Check to see what special offers are out there, such as a “12 month no interest deal” especially if you may need to make some larger purchases and want to spread the cost out over a year.
- Get the most from your card. Be sure to take advantage of those perks. For instance, some cards offer flight discounts, cash back, extra points on certain purchases, no interest for a period of time, etc.
- Make payments on time. Stick to making purchases that you are able to pay off each month, however; if you can’t pay in full, at least pay the minimum on time, every time.
- Don’t close your oldest account. Even if you no longer use your oldest credit card, consider using it every few months to keep it active. The length of credit history helps to make up some of your credit score.
- Regularly check your credit scores and reports. This information can be accessed annually using annualcreditreport.com. Be sure to check for errors and discrepancies. If you find any, be sure to dispute them, as they will negatively affect your credit score.
- Become an authorized user on an account. Whether you’re starting from scratch or looking to improve your score, ask a parent or loved one if they are willing to add you as an authorized user. Before doing so, be sure that the account has a positive payment history and a low credit utilization.
Keep in mind, this process won’t happen overnight. It will take time and consistency but by establishing and maintaining good credit, you are setting yourself up for financial success.
