Building Credit Is Super Confusing, But It Doesn’t Need to Be

Your teenage years are the time to start building your credit history. Yes, we know, this isn’t a glamorous topic, but it’s important to listen up! A lot of students might think that credit cards are only for adults or for people who can’t afford to buy things with cash, but the reality is that all sorts of people get and use credit cards, and they’re a serious responsibility. Not paying your bills on time or racking up a large amount of debt can be incredibly detrimental to you, now, and in the future. A good credit history and good credit card habits are essential.

High school and college are the perfect times to apply for your first credit card. Use it wisely, and you can start building a solid financial foundation for the rest of your life. Use it unwisely – i.e. buying extra-large pizzas on the regular for all of your friends or splurging needlessly at the mall – and you can be in for a world of hurt. After you graduate from college, you’ll probably want to rent an apartment, buy a house, and/or even a car. You can’t do any of those things without a good credit history or with bad credit.

It may sound like hard work, but trust us, it’s totally worth it. It’s also not rocket science once you know how credit is evaluated and determined. It’s simple to play by the rules and easily build a good credit score – you may even already be doing so.

Talk to your cell phone company
If your cell phone plan is in your name then you’re already building your credit history. Any time you owe a company money and have to pay them by a due date you are building your credit history. So don’t miss any of your cell phone payments! It’s also important that the bill is in your name, and not your parents’, so that you get the credit, pun intended. See how easy that was? You’re already on your way to building a good credit history.

Get a credit card with a low limit
If you don’t yet have any services registered in your name such as an electric bill, a cell phone, or your cable provider then applying for a student credit card is a great way to start building your credit history. Last week, we provided some great tips on finding the best credit cards for you, someone who is a little new to the game.

To avoid any spending temptation, apply for a credit card with a low limit and start using it each and every month. We’re not saying you need to max it out every month, in fact, don’t do that, but getting into the habit of using it and paying it off every month is another great way to build history. This means that it’s important to set a spending limit that you can actually afford to pay off in full every month. This will keep your credit in good standing and help you avoid late fees and unnecessary interest charges.

Remember your student loans
This is a common form of credit for college students. It’s also a great way to learn how to manage money, set a monthly budget, and build your credit history. At the time of graduation, your student loans are probably the biggest debt you have, so it’s important to make sure you treat them responsibly.

Even one missed payment can have a long lasting effect on your credit history. Make sure you know your repayment options, set up recurring payments from your checking account, and check your progress to ensure that your student loan repayments are always in good standing.

This is just a primer on creating and keeping a good credit history, but they’re important first steps on something that will affect you for the rest of your life. No pressure, just saying!

Ginger is the founder and CEO at Girls Just Wanna Have Funds. There, she teaches women how to break financial ceilings one stiletto at a time!

 

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