It’s all fun and games until you find yourself having no credit, or even worse, bad credit. I want to challenge all young people to start focusing on their credit. I know, I know this is a topic many find unimportant, even boring. But if you have not established credit yet, it is time to begin giving it some thought. If you remember nothing else from this article, please remember that having a good credit score will save you tens of thousands of dollars in your lifetime and will also afford you certain financial freedoms.
If you are at least 18 years old you can apply for a credit card. Some good places to start would be applying for a student credit card, store credit card, or a secured credit card. I suggest one of these three options because they all have low risk involved. Furthermore, these credit cards will start with a low credit limit because the lack of credit history. There are so many fantastic resources to help you with all your needs.
For comparing different types of credit cards, a site I love using is NerdWallet. it will give you all the information you are looking for in one place.
Another website/app I couldn’t live without is CreditKarma. Credit Karma is a free resource that shows your credit report, it keeps you informed and gives helpful tips to keep in mind.
So, you know:
When I was between 18 I applied for the Discover student credit card. I did this because Discover is good at advertising their different types of cards and the benefits you receive from them. They also have a very user-friendly app, as well as helpful customer service support. The card I got offered cash back and double cashback at places like restaurants or gas stations. It also offered no interest in the first year.
When I first got their credit card my credit limit was only $500. As I started using the card appropriately and paying it off monthly, my credit limit went up significantly every 6-9 months. When your credit limit goes up it is important to remember to not overspend and to be self-aware by living within your means. Overspending and abusing your credit card is what gets most people in trouble and in credit card debt. This can be avoided if you can be disciplined and form good habits from the beginning. Some things that affects your credit include on-time payments, credit usage, inquiries, and the lifespan of your credit.
Tips to help your credit stay in good standing:
- Make on time payments: If it helps, set up automatic payments to ensure something is not missed.
- Avoid too much too soon: Do not apply for several credit cards in a short period of time, wait 6 months in between if you can.
- Do not keep high balances: A rule of thumb could be to stay under 30% for usage on your credit limit.
- Keep an eye on your credit report: In this case what you don’t know can hurt you, it is important to keep up with managing your credit and being “in the know.”
- Be patient: Establishing credit can seem like a long process but keep calm. You are going to be fine if you take care of it. You got this!