Starting building credit can be challenging when you don’t have any credit history to your name, and many don’t know where to start. You may or may not get approved for a credit card, auto loan or that apartment for rent if your credit history hasn’t been established.
Here are three ways to shape your credit score and maintain a good one so purchasing big ticket items in your future is a synch.
Accept Student Loans in College
Young adults entering college probably don’t understand the full realm of student loans or stay away because they don’t want to graduate with debt, but having these loans to your name helps you in the long run. Student loans are installment loans, they are given to you one time only and are paid back over a specific period of time. Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans and Federal Loans are the types of Federal Student loans offered by colleges. The student loans you are offered and accepted by FAFSA are automatically reported to credit bureaus, so your credit is being established. Once you graduate you have a grace period typically at six months before you must begin repaying those loans, but there are options if you are not financially in a secure situation to begin tackling them.
Apply for a Secured Credit Card
Look into start up credit cards with low interest rates. Chances are your very first credit card isn’t going to have a high limit and that’s ok. Research your options and see which offer looks like the best fit for you. Most applicants who apply for a secured card are approved despite their lack of financial history. Young adults accepting first time credit cards need to learn balance and self-control to avoid trouble later on. Use your card responsibly by making purchases and paying more than the minimum each month and on time.
Get a Co-Signer
If your parents or the elders in your life have stellar credit, having them co-sign a loan or unsecured credit card for you is an option. Applying with a co-signer improves the chances that you will be qualified and at a lower interest rate too. If you do go this route you must be responsible because your co-signer is held fully accountable if you begin to slip. Being on the same page with your co-signer is vital.
It’s important to maintain healthy financial habits to continue to boost your credit score. Check your FICO credit score monthly and monitor any increases or decreases in your score. If you notice strange activity get to the bottom of it immediately. It is much harder to repair a damaged score once it begins to fall without action.
Lastly, don’t max out your cards. Debt is easier to build up than you may think and once you are in over your head it’s sometimes impossible to get out. If through your life you’ve used credit cards to get by and are now swimming in debt, Americor can help. Americor is a debt relief company that listens to your situation and creates a plan of action that will work for you.