Sooner than you may realize, your credit score will start to matter.<\/p>\n\n\n\n
A solid credit score<\/a> can be the difference between qualifying for an apartment or a low-interest car loan or missing out. So to have credit ready when you need it, the time to start building a good and lengthy credit history is now.<\/p>\n\n\n\n There\u2019s more than one way to build credit, and it could be as simple as reporting your ongoing bill payments to the major credit bureaus. But keep in mind: Building credit takes diligence, particularly since missing payments can hurt your score for years to come.<\/p>\n\n\n\n What is credit and why does it matter?<\/strong><\/p>\n\n\n\n Your credit score is a number that typically ranges between 300 and 850 and is calculated based on how reliably you\u2019ve paid past debts, such as credit card bills. Lenders use your credit score to predict how likely you will repay debt.<\/p>\n\n\n\n Your credit score helps determine the loans you can receive, the interest you\u2019ll be charged, the credit cards you can qualify for and the properties you can rent. An employer can even check your credit history. Having a good credit score can save you money later on, mainly through lower interest rates when you secure a loan.<\/p>\n\n\n\n If you\u2019re starting with no credit history, you aren\u2019t alone. In the U.S., nearly 40% of people between the ages of 20 and 24 have little to no credit history to generate a score, according to the Consumer Finance and Protection Bureau. Unfortunately, the same is true for roughly 20% of the population.<\/p>\n\n\n\n Building your credit might seem overwhelming if you haven\u2019t thought about it before, but there are many strategies to employ, even if you\u2019re just beginning. Start by establishing good habits with managing debt, such as not taking on more debt than you can afford, says Brittany Mollica, a certified financial planner based in Chapel Hill, North Carolina. Missing payments will damage your score and can become a burden when you need to borrow money in the future.<\/p>\n\n\n\n \u201cGetting in good habits of always paying your bills is really important,\u201d Mollica says. \u201cYou don\u2019t want to have to be climbing out of a hole of all sorts of credit card debt that you\u2019ve piled up, especially starting out early on.\u201d<\/p>\n\n\n\n Credit cards \u2014 and alternative cards<\/strong><\/p>\n\n\n\n Credit cards can be a great tool to establish credit, but they can also damage your score if you take on more debt than you can handle.<\/p>\n\n\n\n If a parent or another trusted person in your life has a high credit limit and a long history of making timely payments, you could become an authorized user on their account and benefit from their good credit. This is one of the easiest ways to lengthen your credit history, says Blaine Thiederman, a certified financial planner in Arvada, Colorado.<\/p>\n\n\n\n Becoming an authorized user will also impact your credit utilization rate, or the amount of money you owe to lenders divided by the total credit available to you, which can help your credit score.<\/p>\n\n\n\n If you have your own income, you can apply for a credit card when you\u2019re 18 years old; otherwise, you have to wait until you are 21. A secured credit card is typically the best credit card to start with. A cash deposit backs these cards, and since the credit card company can take that deposit if you miss payments, people with short or poor credit histories can qualify.<\/p>\n\n\n\n The deposit you have to make for a secured credit card could be a burden, and if that\u2019s the case, an alternative card<\/a> might be better for you. These cards use income and bank account information to determine your creditworthiness rather than your credit score.<\/p>\n\n\n\n Monthly bills<\/strong><\/p>\n\n\n\n If you live independently, payments for rent, utilities and phone bills can all be reported to credit bureaus. So paying those bills can build your credit<\/a> if they\u2019re on time and you have them reported.<\/p>\n\n\n\n Unlike credit card payments, these payments aren\u2019t reported automatically and can require a third-party service, such as Experian Boost, to make the credit bureaus aware of your payments.<\/p>\n\n\n\n Remember, these services sometimes require a fee and reporting your bill payments may not always impact your credit score; instead, they may just appear on your credit report.<\/p>\n\n\n\n Loans<\/strong><\/p>\n\n\n\n Making regular payments on loans can also help you build your credit. And even if you don\u2019t have any credit history, some loans are available.<\/p>\n\n\n\n Credit-builder loans rely on income rather than credit for approval. If you\u2019re approved, the loan sits in a bank account and becomes available once you pay it off. Your monthly payments are reported to the major credit bureaus.<\/p>\n\n\n\n Student loans<\/a> are another loan you can use to build your credit when you\u2019re just starting. Federal student loans don\u2019t require credit to qualify, while most private student loans do. Paying off your loans will help you grow your credit history, and you can get started while you\u2019re still in school by making interest-only payments.<\/p>\n\n\n\n This article was written by NerdWallet and was originally published by The Associated Press.<\/em><\/p>\n\n\n\n More From NerdWallet<\/strong><\/p>\n\n\n\n Colin Beresford writes for NerdWallet. Email: cberesford@nerdwallet.com.<\/p>\n\n\n\n The article For Young Adults, Building Credit Starts Now originally appeared on NerdWallet.<\/p>\n","protected":false},"excerpt":{"rendered":"Sooner than you may realize, your credit score will start to matter. A solid credit score can be the difference between qualifying for an apartment or a low-interest car loan or missing out. So to have credit ready when you need it, the time to start building a good and lengthy credit history is now. There\u2019s more […]","protected":false},"author":7,"featured_media":2415,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","attr_excerpt":["A solid credit score can be the difference between qualifying for an apartment or a low-interest car loan or missing out. So to have credit ready when you need it, the time to start building a good and lengthy credit history is now."],"footnotes":""},"categories":[3],"tags":[7,8,27,29,20,31],"class_list":["post-2413","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance","tag-bank","tag-borrow","tag-credit-cards","tag-personal","tag-savings","tag-student"],"yoast_head":"\n