7 Tips to Establish and Build Credit as a Young Adult

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Just starting out? Building a credit history doesn’t have to be complicated, but getting it wrong can throw you off balance and cost you more money. Young adults are often new to credit and can be quite vulnerable to believing credit unrealistic myths and false information. Here is what you need to know and do to start off like a boss.

1. Understand Your Finances

It’s important to understand how credit works before you start building credit. You’ll need to know what types of loans you qualify for, what interest rates you’re eligible for, and what kind of payments you should expect. If you don’t have any idea where to begin, talk to a financial advisor or bank representative about your situation.

2. Build Your Credit Score

The first step towards establishing credit is to build your credit score. To do this, you’ll need to make sure you pay off your debts on time each month. Paying bills on time helps establish good payment history, which is a major factor in determining your credit score.

3. Get Pre-approved for Loans

Once you’ve built your credit score, you’ll want to get pre-approved for loans. This way, you’ll know exactly what type of loan you qualify for and at what rate. Once you find out what you qualify for, you can shop around for the best deal.

4. Apply for Loans

After you’ve gotten pre-approved for loans, apply for them! There are many different types of loans available, including auto loans, student loans, mortgages, and personal loans. Each loan has its own set of requirements, but once you meet those requirements, you’ll be able to take advantage of the great deals lenders offer.

5. Keep Up Payments

If you’re going to use a loan to buy something big, like a car or home, you’ll probably need to keep making monthly payments. Even if you aren’t using the money right away, you’ll still need to continue paying back the loan over time.

6. Avoid Late Fees

Late fees are fees that you’ll incur if you miss a payment. These fees can add up quickly, so try to avoid incurring late fees whenever possible.

7. Make Sure You Can Afford It

Before buying anything big, make sure you can afford it. If you can’t afford it now, you may not be able to afford it later. Before you spend thousands of dollars on a vehicle or house, make sure you can actually afford it.

In Conclusion

Maintain your reputation. Don’t allow your creditor to close an account that has a balance, such as a utility or cable account when you move, make sure to pay off the balance with the original creditor only. Leaving the bill unpaid could result in the account getting sent to collections. You do not under any circumstances want to let it get that far. So avoid having to be chased down and harassed by them. Take full control or you will be controlled by them.