Starting credit building may seem daunting when you are young. However, it is possible. It is possible to build credit at an early age by doing a few simple things. A good place to start is with one or two credit cards. You can also cosign for a loan or credit card.
Authorized user
Building credit is an important life skill. It can help you get what you want later in your life. Good credit can help you get the best terms on financial products and even save you money. It takes some forethought and research, but it will pay off in the long run.
Co-signing a loan or credit card
Co-signing for credit cards or loans can help improve your credit score, but you should be cautious. You have to decide whether or not you can trust this person and if they are financially able to handle the obligations. Banks won't be interested in your good intentions. Instead, they want to ensure that you pay the debt.
Get a cell-phone plan
You can build your credit and get a low-credit cell phone plan. There are many different options, including prepaid plans that don't pull your credit. These plans are great for those who don't want a long-term contract. In addition, prepaid plans are usually much cheaper than a traditional plan, and you can add additional users for very little money. There are many incentives offered by major carriers for adding users.
Secured credit cards
It is a good idea to get a secured creditcard in order to build your credit score. These cards are very similar to regular credit card, but they require a deposit. It is usually equal to the credit limit. Your activity on these cards will be reported to the major credit bureaus. This can help you build your credit history. This will eventually lead to you being approved for a regular credit card, or other credit products.
Getting a debit card
A debit card can be a great option for anyone who is interested in building credit. New customers can get a free FICO credit score from most banks once per billing cycle. The debit card functions in the same way as a prepaid card, except that you can withdraw money from your bank. But, it can be linked to existing credit lines and build credit.
Paying minimum credit card payments
Young adults can build their credit history by making minimum payments to credit cards. Young adults are often limited in their income and credit history so there are few options. Young adults should aim at paying off their balances every month and not having more than 30% of available credit.