3 Best Ways for a Young Person to Build Credit
For people who are in high school or just hitting college age, building a strong credit history might not seem important. But in today’s challenging world, showing that you are responsible with money matters a lot.
Good credit scores will allow you to get better rates when it is time to take out a mortgage. Moreover, many employers are now checking credit scores when recruiting new candidates. So, how do you build credit starting from a young age?
1. Get a Credit Card with a Low-Limit
One of the best ways to build credit as a young person is to get a credit card and then pay it off in full every month. You might quality for a secured credit card where you have to make an initial deposit. Remember not to use this card as a way to spend money that you don’t have. Instead, use it only to build credit.
2. Become an Authorized User on Your Parent’s Account
If you are going to college and haven’t started earning yet, you should become an authorized user on your parent’s account. This practice is called ‘piggybacking’ and it can help you build good credit if your parent pays off their balance on time every month.
3. Practice Good Financial Habits
Building credit takes time and since you are starting early, you have some time to build strong credit. Practicing these good financial habits will help you build your credit score over time.
- Make all your payments – including utility bills – on time. Bills that aren’t paid may be sold to a collection agency. This can seriously damage your credit.
- Check your credit reports every year for discrepancies and errors.
- Use your student loans for education expenses only
Start building credit from a young age, and with time, you will have a strong credit history. This will not only make it easier to qualify for loans and get better rates, but this will also establish a strong foundation for a smart financial future.