The Importance of Good Credit: Building Your Credit Score

Talking about money isn’t everyone’s cup of tea (unless you’re spending it of course), but being financially responsible is still an important part of being an adult.  If you’re young, you may not have even thought about how your credit score can impact your life, yet it follows you wherever you go.  Having a strong credit start is so important to making your life easier in the future and by following these brief tips, hopefully you’ll be able to make your credit score debut a good one.  If your credit is in the dumps, these tips can also help revive your score.

First, let’s ask why developing credit is a big deal while you’re so young.  Your credit score is used for a lot of big, important purchases: renting an apartment/house, buying a car, applying for loans.  Recently, my husband and I just rented our first house togimg_2424ether.  It’s a gorgeous house, 3 bed/2 bath in a great location, and several people were applying for it during its open house for good reason.  My husband and I applied and we were the first people they offered it to solely because my credit score was the best at 754.  Which shows that even if you have decent credit in the 600 range, it may not be enough to get what you truly want.

So now how do we build credit when it’s so low or you have none?  This is a good question that a lot of people struggle with.  My suggestion to you is to find someone who is reliable and is willing to add you as an authorized user on one of their credit cards.  Don’t make any purchases with the card, and as long as they keep the card open you’ll slowly develop credit.  Please be sure this person is reliable or else they could end up hurting your credit.  If you can’t find anyone to add you as an authorized user, your next option is to either apply for a small credit card or a small loan through a bank (not a loan store that offers loans at ridiculous interest rates!).  The first credit card I was able to get was a Walmart credit card with a max limit of $500.  I could only spend it at Walmart which was fine because I didn’t want to rack up lots of debt.  If you were denied a credit card, do not keep applying for others.  Every application counts as a hard inquiry and having more than 2 will hurt your score.

Keep in mind that you aren’t opening the credit card to spend money; you’re opening the card to develop credit.  Never spend more than you have and my suggestion is to pay off the credit card balance as soon as you make a purchase on it in order to avoid interest fees.  You may have heard that doing so doesn’t help your credit, but this is not true.  Any time you make a purchase on the card and pay it off, that will help your credit.

Keep yoimg_2431ur card(s) open and use them regularly to avoid having the account deactivated from disuse because a long history with the issuer will help your credit score.  Pay off the card every month because just one missed payment will deeply hurt your score.

Lastly, keep track of your credit through a free site like Credit Karma.  This site can give you great tips on what you’re doing right and how to improve the weak points in your credit score. Credit Karma can also give you approval odds if you’re interested in applying for a credit card.

This post is just the tip of the iceberg.  If you have any of your own credit tips, please leave them below in the comments!

 

See you next Wednesday!

-Meagan

I am a Creator. A Rockstar. A Romantic. I am an artist with the itch to design letters into words into stories that will resonate with you. My goal is to share with the world the thoughts in my head, ideas that will either inspire you or change you. I am a Writer. A Storyteller. I am Marvelous. Mischievous. Meagan.



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