Start Building Your Credit

December 14, 2016

For a healthy retirement, think about these suggestions and start building your credit.

Some young people prefer to avoid the subject of credit altogether because it seems too complicated for them and they don’t think it’s worth much attention so early in life. But the fact is, it’s not smart to put it off. If you’ve never had a credit card or a loan, your credit history is blank, which means there’s no record anywhere that attests to your ability to responsibly manage credit. And that could affect your ability to get credit in the future.

You can start to generate credit in these ways:

 1 open a banck account

  1. Open a bank account. If you want to apply for a loan or a credit card, you should start by opening a bank account. Although doing that is not required, it will help you with your credit history.

2 guaranteed card or an insured loan

  1. Apply for a guaranteed credit card or an insured loan. Once you’ve applied for a credit card or insured loan, it’s very important that you always make your payments on time. If you decide to apply for a loan, find a qualified co-signer—a family member or legal representative who will also be responsible for the loan.

3 use your card carefully

  1. Use your credit card judiciously. To establish good credit, try to use the card in moderation. Use it to pay for only what you can pay off each month. It’s advisable not to use all the available credit, as that will show that you manage your debts responsibly—and that, in turn, will improve your credit rating.

4 order your credit reports

  1. Order credit reports. You can order credit reports from several agencies: Equifax, Experian, and TransUnion, among others. After using your credit for six months, check your rating. Review the positive and negative aspects so you can correct anything you’re doing wrong.

5 other credit pproducts

  1. Find other credit products. There are other products that can help you generate a credit history. Popular Auto’s Starting Connection allows you to apply for an auto loan or lease with the support of a qualified co-signer. Another option is Credi-Ahorro, which allows you to put the money from an approved loan into a certificate of deposit, while you gradually pay off the loan over the term you choose. When your loan is paid off, the bank will disburse the money in your CD plus the interest it’s earned.

The process of generating credit takes time. You have to be responsible with your financial decisions and have patience, because the best way to build your credit is little by little. This will help you generate a solid history without becoming over-committed with high-dollar loans or too many credit cards. Remember, it’s not only about paying your bills on time—it’s important to build a solid financial future, and that includes saving for your retirement.

Want more tips for a healthy financial future? Click here to watch a video on these strategies. For more information about credit, go to Banking 101 for advice that will help you achieve your financial independence.

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