Building Credit for Beginners

Credit is single-handedly one of the most important aspects of your financial life. Without credit, you can’t have a credit card, or buy a car or a home. It could also affect your future employment, depending on where you apply. With that being said, it’s never too early to start building credit. 

The tricky thing about credit is that the only way to build it, is for someone to approve you and give you some. But without any credit history, financial institutions are hesitant.

My suggestion, in order to start building credit, is to apply for a small secured credit card. With a secured credit card, you put the funds on hold in a separate account you can’t access, to cover the limit of the card. This is security for you and your financial institution to know the card will be paid. It also will teach you the responsibility of using the credit card and paying it back, but you already have funds on hold to pay it, so you don’t over extend yourself in the process.

The most important thing is to always pay your bill on time. If you are not paying your loans on time, it will negatively affect your credit score. Once your credit is unfavorable, it is very difficult to build it back to a favorable status with a high score. This is why it’s important to budget your credit limits and payments and always pay them on time.

This post was written by Brooke Gaskie, FTWCCU Financial Services Representative.