Having good credit is practically a necessity these days. Without good credit you will pay higher interest rates on loans, and it can be difficult to find decent housing, establish utilities in your name, or qualify for some jobs. If you do not have an established credit history, you need to take steps to start building your credit now.
One of the first things you can do is open a checking account in your name. If you keep your account in good standing this will be an indicator to creditors that you know how to manage your money.
You can also apply for a department store or gas card. These types of accounts are usually fairly easy to qualify for. If you make small purchases on a regular and frequent basis and then pay your bill on time and in full every month you will begin to establish a good credit history.
Next you can apply for a major credit card. There are two main types of credit cards: secured and unsecured credit cards. Unsecured credit cards do not require collateral or a deposit. They come with lower interest rates than secured credit cards. However, if you are just starting out without an established credit history you may need to apply for a secured credit card. These cards require you to make a deposit with the bank or financial institution that issues the credit card. If you default on your card, the credit card company can use your deposit to recover on the unpaid balance. You want to be responsible with your first credit card. If you are trying to establish your credit history you don’t want to rack up a big balance. Make regular purchases and then pay the balance in full when you get your statement each month.
You may also want to apply for a car loan or other form of installment loan as well. Showing that you can handle different types of credit (installment loan, student loan, credit card) has more of a positive impact on your credit score than just having several credit cards or one form of credit.
The key to establishing your credit history is to open a few different types of credit accounts, make regular purchases, and make all your payments on time. If you do these simple things you will begin to establish a good credit history with a good credit score. Check your credit report on a regular basis to note your progress and to make sure there are no errors or omissions on the report.