As a “twenty something”, it can be a challenge to achieve high credit scores – simply because you probably don’t have any credit established.
Credit and credit scoring is a long-term game. To use a common analogy, “It’s a marathon, not a sprint.” And so, your marathon begins. However, just as the tortoise defeated the hare, you can start doing certain things when you are young that can give you top tier credit throughout your entire life.
Here are a few tips for young adults looking to achieve high credit scores…
1. Pay your bills on time.
Regardless of whether it is your cell phone bill, a utility bill, car payment, or credit card bill, make it a point to pay it on time. Avoid buying items on credit if you do not have the ability to pay the bill on or before its due date. When you’re young and new to credit, late payments will crush your scores.
2. Get a credit card and use it wisely.
Sometimes, if you have no established credit, you may need to begin with a secured credit card (a card that is secured by cash deposits). By using a secured credit card responsibly and paying the bill on time, you will eventually be able to qualify for a non-secured card, which will give you more purchasing power and allow your credit profile to build.
3. Do not max out your accounts.
Whether you have a secured card, non-secured card, department store credit card, or any other card account, avoid maxing it out. Keep the balance around 35% or less, and make that payment on time. Doing this will start to give you a strong credit history.
4. Open a bank account.
If you don’t already have a bank account, this should probably be your first step. Although your banking information does not appear on your credit report, having a bank account linked to your credit card will help you make timely payments and create positive financial habits.
5. Get a steady job.
Like banking information, your job history does not appear on your credit report. However, without a steady job, you may find it difficult to get approved for any type of financing or credit card. Lenders want to see employment and income before they are willing to extend you credit. Without a job, building strong credit is a major challenge.
What if you already have negative credit items?
Regardless of your age, if you already have negative credit items such as late payments, we can help you get those removed and give you back that “clean slate” that is needed to build strong credit scores. If this is your situation, give us a call and let’s discuss your options.