This is how to build credit while young. These tips for building a good credit history will work for everyone, but they are especially helpful to those under 30 years of age.
Without further ado, here is your guide to an awesome credit score while you?re still young!
Having a good credit score is important when applying for a loan, but it is increasingly becoming important for getting a good job and renting an apartment as well.
Good credit is especially important for those under 30 as well because they typically have less cash flow due to lower incomes and student loan payments.
This leaves many who need a good credit score to get the best deal on a new car,a home mortgage or even just a low APR credit card.
5 tips for building a good credit history
Here are 5 tips to help you get on track for the best credit score you can get and build a solid credit history at the same time.
1. Start early
Personal finance is a game where time starts out as your friend and gradually becomes your adversary.
The earlier you can start building good credit, the less you will pay in interest and the more of your money you can keep.
Apply for a credit card as soon as possible, and look for other small and easy to qualify loans ? like secured personal loans. Work up to a car loan.
Just be absolutely sure to pay off the loan on time and in full.
Within five years, you should have an excellent history and score to go with it.
2. Plastic, not paper
Have a credit card and use it!
This may seem counter to much personal finance given to young people these days, which is often pay for things in cash and skip credit cards. But as long as you are responsible ? pay off the balance in full every month - then there is nothing wrong with using a credit card. In fact, using a credit card will build your history, but cash will not.
When it comes to building your credit history, using cash is wasting time.
3. Apply for credit wisely
Begin building your credit slowly with a single credit card. If you can?t get a traditional Visa, MasterCard, Discover card or American Express card then a department store card will do.
The key is to pay it off every month and don?t apply for more than 1 every 10 months or so.
Having too many credit cards is a bad sign, and too many too soon will really hurt your score. So be patient, and prudent.
4. Mind the balance-limit gap
A key component of your credit score is something called the utilization rate of your available credit.
Put simply, this is a measure of how high your balance is compared to your credit limit.
You want to keep it below 30%, which means less than $330 for every $1,000 limit.
You can also try calling the credit card company every 9 or 10 months and ask for an increase. The trick is to ask if they can raise your limit without a running a credit check
5. Know your report
Stuff happens, and it?s best you know about it as soon as possible when it happens to your credit history.
Get a free credit report periodically and check it for erroneous details.
When I applied for my first car loan, I was given an exceptionally high interest rate because I had a bankruptcy on my credit report.
I thought this odd since I never declared bankruptcy and was fresh out of college. After looking at my credit report I saw that it did indeed show I had declared bankruptcy ? while I was still in high school!
This was easily cleaned up. All it took was me contacting the reporting agency and pointing out that I was a sophomore in high school at the time of the supposed bankruptcy. They removed the bankruptcy from my report and I was able to get a much better rate.
Bottom line: Your credit report is a reflection of you, and the only one that matters to lenders (and sometimes landlords and employers!), so make sure it?s accurate. Otherwise, all your effort could be wasted.
Source
Related Posts:
Source: http://simpledebtfreefinance.com/5-awesome-credit-tips-for-young-adults/
melissa gilbert deadliest catch dwts sean hannity bobby petrino fired buffett rule lollapalooza lineup
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.