One of the great things about being a young adult is that you most likely do not have any negative marks on your credit. Because you are just starting out, it is important to understand that having a great credit score is the result of having positive credit items, a good payment history, and time. A good credit score requires some credit history – the longer, the better.
Building credit is quite easy and there’s never a good reason to put it off. The sooner you get started, the better your credit score will be.
Tools to Build Credit
Just like you need tools to build a house, you’ll need tools to build your credit, too:
1. Credit cards. This is the most common way to get started. Credit card companies usually consider you to be a good risk, primarily because they believe your parents will jump in and help if you get into trouble.
2. Get a secured loan. Make sure that the loan reports to the major credit bureaus. This type of a loan is secured against your savings account. The bank would freeze enough funds in your account to cover the amount of the loan. As you pay off the loan, the corresponding funds are released.
Creating great credit is quite easy; it just takes a little discipline and planning. If you can get 2 credit cards and use them appropriately, you’ll be well on your way. If you can also get and pay off a couple of loans, you’ll be shocked at how great your credit score is by the time you graduate.
Increasing Financial Awareness and Building Financial Stability