Whether you’re in the market to take out a personal loan or apply for a mobile phone contract or get a new credit card, your credit score is a major consideration for providers and lenders. Having bad credit, for instance, can mean a lot of disadvantages. In fact, your application is going to be refused more times than it will get approved. With this in mind, it’s important to build a good credit history from the get go. If you’re a young consumer, this guide is especially for you.
Get a suitable credit card
If you’re in college and you’re just starting out with building your credit score, the best place to begin with is getting a college credit card. It is not only easy to apply but its terms are especially designed to suit consumers like you.
Either you acquire a credit card or take out a loan to become an authorized consumer. This is the only way to build credit history. Even if you don’t like debt, you need to get your feet wet if you want a good credit score to begin with. Just remember that debt per se is not bad. You just need to be a responsible borrower to avoid any unpleasant consequences.
Apply for a secured credit card
If you’re not confident with your ability to control your spending, you might be better off getting a secured credit card instead. This type of cards is designed so it will be easier for you to stay within your means. With secured credit cards, you will be required to make a deposit. The deposit is like the collateral for your debt which is also usually the basis for your card’s credit limit.
Secured credit cards are great for building credit scores provided that you use it responsibly and pay your dues on time.
Take advantage of store cards
Just in case you have a hard time getting a standard credit card, you may consider getting a store card instead. A store card is easier to get approve for but the interest is usually higher. Like with other types of credit cards, the trick is to maintain a reasonable balance. Swipe wisely and pay each bill in full at the end of the month.
Young consumers are encouraged to apply for one to three store cards as a start. Again, we reiterate to use them wisely and pay them consistently if you want a good credit score.
Pay your bills on time
Another great way to build credit history for beginners is to pay your bills on time. If you’re renting, for example, this is the best time to ensure your payments are always on time and in full. For this to have a positive effect on your credit score, however, you need to make sure your name is on the lease. You also have to find out if your landlord reports your payment activities. Otherwise, you may need to pay rent through other services which track your payments and reports them to the right agencies.
The same principle applies with other utility bills. Again, make sure your name is on the lease and your activities are reported accordingly.
Get a phone contract
Like everyone else, you probably need a phone contract for your phone services. Like with rent and other bills, you need to make sure your name is on the contract. Then pay for your monthly bill on time to add to your credit history. If you’re responsible and consistent, chances are high that you’re going to have a good credit score as a result of your efforts.