Credit Building Tips
One of the first problems you’ll come up against as an adult is building your credit history. Whereas before you can just ask your parents for funds when you have a lack of it, as an adult it’s time to get used to paying your own way. Unfortunately, you need a credit history in order to obtain credit, something that few 18 year olds are blessed to have. Credit history is a record of all your financial accounts, from your utility bills, loans, and even down to every delayed payment or money that you haven’t paid back. Any potential bank or credit card company is going to want to have a look at this record to have a sense of what kind of borrower you are.
Don’t fool yourself for one second that building up a credit history is an easy or overnight thing to do. But it’s essential that you start out your financial record the right way with these suggestions:
1. Get a credit card.
- These days, there are credit cards aimed specifically for students, and if you handle this account well, this can be an influential thing for your credit history. One way is by getting a “secured” credit card, also known as a prepaid card, which grants you an account limited by the money that you deposited into it. Any monthly sums you make to this account either replace what you’ve already spent, or even better, raise the credit limit if you deposit more. The important part is that you pay the “bill” on time every month, and this will manifest on your fledgling credit history, demonstrating that you can be trusted to be responsible by taking care of your bills monthly.
Tip: Keep the credit balance low when you start out. Make it a sum that you can easily cover with your monthly income.
2. Open a Bank Account.
- While you must be 18 years old and over in order to get your own credit card, there is no such thing as being too young to start saving your money. Automatically deduct ten percent from any money you receive, whether it’s your allowance, salary, or a gift, and put this into your account regularly. Check with your local bank to learn about their requirements for opening one.
3. Get a utility bill in your name.
- One of the ways credit bureaus track your financial movements is with monthly bills in your name. A utility bill in your name, such as for your cellphone service, can be another great thing in your favor as you build up your record.
4. Look for a Co-signer.
- One of the things that can help you land a loan in your name is by asking a co-signer to secure it, a move that will make the banks see you as a less risky borrower. Your parents, as long as they have good credit histories, can be a a good co-signer for you. However, don’t take this as a reason not to pay for the loan, as not only will your credit history take a hit when you do so, but your co-signer’s as well.
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