Adulting is hard. If you haven’t already, you have to find a job, enroll in college, and basically figure out what you want to do for the rest of your life. There will never be a more exciting time, however stressful it may be. One of the most important things to be aware of as an adult, however, is your credit score.
Your credit score is a number that basically measures how responsible you are when you borrow money. It will communicate to lenders how likely you are to pay back the money you borrow, as well as whether or not you will pay it back on time. Essentially, this score can impact how much interest you will pay when you take out a loan. Over time, that interest can cost or save you thousands of dollars. A low credit score can have negative consequences.
Basically, if you want to buy a house, a car, or other important things people do in the adult world, you will have to start building your credit now. Below is a list of ways that will explain how to build credit at 18.
Easy Ways to Build Credit at 18
Become an Authorized User
One of the easiest ways to build your credit score is to piggyback off of someone you know. For example, your parents can add you as an authorized user on their credit card. This means that as long as the cardholder makes regular payments on their card, you get to benefit from their credit score even if you don’t use the credit card.
However, if the family member or friend you are listed under makes irregular payments -or worse, doesn’t make payments at all- your credit score will be negatively impacted. On the other hand, if you are doing a poor job of paying back the borrowed money, your friend or family member’s credit score will likewise drop. In other words, be mindful of who you decide to be an authorized user with.
Get a Credit Card
One of the simplest ways to build your credit score right now is by getting a credit card. As long as you pay off the card in full at the end of every month and pay it on time, you can easily boost your credit score.
However, as an 18-year-old, it can be difficult to qualify for a credit card. Luckily, there are some starter credit cards for people with little to no credit history.
Take Out a Student Loan
Are you going to college? If so, you might have to take out student loans. Though the thought of borrowing money might seem frightening, don’t despair! Student loans don’t need to be paid back until after graduation and they are a great way to start building credit.
Essentially, people with a long credit history get a boost in their credit score. Whether you work to repay loans while you are still in school or wait until after graduation, student loans usually have a long repayment period, which can positively impact your score over time.
Just beware. If you default on your loans, fail to make payments, or make late payments, you will negatively affect your credit score.
A Routine of Good Habits
In the end, the best way to build credit is by making good habits now. Whether you decide to get your own credit card, become an authorized user, or take out a loan, make all of your payments on time. Additionally, make sure not to use your credit card too much. In other words, only use about 30% or less of the maximum credit amount you are allowed to spend. Lastly, limit the number of credit accounts and loans you take out. Too much borrowed money can lead to debt, late payments, and they can negatively impact your score.
Congratulations! You are adulting!
You can build a great credit history just by learning how to build credit at 18. When you have excellent credit, you will receive the best deals in life when it comes to borrowing money. On the other hand, if over the years your credit score drops, there are services available that will help you bounce back. Go Clean Credit is a great service that helps individuals with bad credit improve their scores. If you are worried about your score, contact them today!