Starting credit building may seem daunting when you are young. It is possible. There are a few things you can do at a young age to start building credit. One or two credit lines are a good start. You can also sign a loan, credit card, or other loan with a co-signer.
Authorized user
Building credit is not only an important life skill, but it can also help you get the things you want later in life. You can get the best rates on financial products, and even save money with good credit. It takes research and some planning but it will pay off long-term.
Co-signing a loan/credit card
Co-signing for credit cards or loans can help improve your credit score, but you should be cautious. You need to decide whether you can trust the person and whether their finances can handle the obligations. Banks do not care about your good intentions. They just want to see you repay the debt.
Get a cell-phone plan
If you have good credit history, you may be eligible for a plan that requires low credit. There are many options. These plans are great for those who don't want a long-term contract. In addition, prepaid plans are usually much cheaper than a traditional plan, and you can add additional users for very little money. Many major carriers offer incentives to add users.
Secured credit cards
Getting a secured credit card is a good way to begin building your credit history. These cards are very similar to regular credit card, but they require a deposit. It is usually equal to the credit limit. In addition, your activity on these cards is reported to the three major credit bureaus, which can help you establish your credit history. Eventually, this will help you get a regular credit card or other credit products.
Getting a debit card
A debit card is an excellent option if you're interested in improving your credit score. Many banks offer a free FICO Credit Score to new customers once a billing cycle. The debit card functions in the same way as a prepaid card, except that you can withdraw money from your bank. If linked to a credit line, the debit card can help you build credit.
Make minimum payments on credit cards
Making minimum payments on credit cards can help young adults build their credit history. The options for young adults with limited income and credit histories are limited. Young adults should aim for paying their monthly balances and not carrying more than 30% of their credit.