At What Age Should You Worry About Building Credit

There really isn’t a set age where you should worry about building your credit. However, there are small steps you should take when you are young that will give you a strong foundation for good credit. Make sure you research what credit is and make responsible decisions.

As soon as you turn 16, try and find a part-time job. Having a good work history is a key element in building good credit. The sooner you find a job, the more likely you are to learn responsibility and good work ethic. Lenders view this favorably.

What are you going to do with all of your paychecks when you get your first job? Cash them? That is a lot of cash to have on hand, and you won’t be doing anything for your credit. Open a checking or savings account. You may need your parents on the account with you. That’s OK. With a part-time job and an account to put your paychecks in, lenders will be impressed with your stability and responsibility. Another way to help you build credit is to be added as an authorized user on your parent’s credit card. Make sure your parent’s have a good credit history, otherwise it won’t get you very far. As a user on their account, you will be able to piggyback on their credit while you build your own credit.

When you are 18, apply for a small credit card on your own. By this time, you should have enough credit to be approved for a small amount. Even if you are approved for more, only put a couple hundred dollar limit on the card. Use this card to make small purchases and then pay it off every month. Not only will this build your credit, but it will get you in the habit of using your card wisely. You won’t be completely dependent on a credit card if you budget your money and pay the balance off every month.

Once you have had a job for several years and used your credit card wisely, it will probably be time to apply for an auto loan. Be careful with this. Make sure you pick out something reliable and something you can afford. Again, budget your money. You probably won’t be approved for a brand new car, but you may be approved for a higher amount than you want to spend. Remember, you aren’t looking for the newest and nicest car. You are looking for something to get you around town and something that will build your credit.

The best way to build your credit is to start while you are still young and make good decisions. Be sure to make a budget and stick to it. This will get you in the habit of being responsible. Make sure you know what you are getting into. Research anything you are unclear on or talk to a financial professional. These are the best ways to build your credit and get you in the habit of having good credit for the rest of your life.

This entry was posted on Monday, July 28th, 2008 at 1:06 pm and is filed under Build Credit. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.