How to Start Building Credit Once You Turn 18

Start Building Credit Once You Turn 18

Good credit is crucial to unlocking many financial opportunities in life. When you have a great credit score, you can get lower interest rates on car loans, credit cards, and mortgages. Follow some of these tips for how to start building credit once you turn 18 to get started as soon as possible.

1. Maintain a Low Credit Card Balance

Most experts recommend keeping your credit card balances below 30% of the available credit limit. Ideally, you should pay your balance off in full each month to avoid interest and keep your utilization low.

2. Get a Loan

Getting a loan just to build credit is generally not a good idea, as you shouldn’t take on debt only for the sake of your credit score. But if you have a valid reason, such as needing a car or money for college, a small loan in your name can help you build credit.

3. Keep It Simple for Now

You can start to add other credit cards or loans to the mix, diversifying your credit profile and adding more opportunities to build credit. Because your accounts’ age affects your credit score, just keeping accounts open will help you build credit history in the long run.

4. Understand the Basics of Credit

Make sure you understand the basics of how credit works. Higher credit scores are more attractive to lenders and creditors. The factors that influence your score include: 1. Payment history 2. Average age of accounts 3. Credit utilization ratio 4. Account mix

5. Get a Starter Credit Card

Credit cards are one of the best tools around for building credit, but you might have trouble qualifying for one when you have no credit history. Luckily, there are a few credit card options for young people with little or no credit.

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