Establishing credit is the most important thing when you’re young next to having a degree from college. It determines what kind of car you will drive, what kind of house you will own, and what type of job you can get. Did you know that some financial institutions won’t hire you if you have bad credit? More Americans are filing bankruptcy every year because they cannot afford to keep up with their debt. There are more benefits of establishing good credit than having fun getting bad credit. Following a few simple steps can lead to the lifestyle you deserve.
Keep a Job for Two Years
Having money lets you buy things you want. Sometimes apartments, banks, and auto dealers want to see if you can keep a job so you can pay your bills. Being on a job for two years lets loan officers know that you have a stable work history and steady income.
Open a Checking Account
When you turn 18 open a checking account to deposit and save your money. There is no better place to keep your money than a bank. When I was young the minimum I kept in my bank account was $1000. If you want you can make the minimum amount you prefer in your bank account. Some banks have promotions where they will pay you to open a checking account. Credit Unions have programs for people called Individual Development Accounts (IDA program). This is a savings account where credit unions will add money to your savings for a small business, home, or education purposes. Check with local credit unions to find which one offers IDA programs.
Pay a Monthly Bill in Your Name
Paying a monthly bill will increase your credit score. It shows that you pay bills on time. When buying a phone you will usually sign a contract which states that you agree to pay for service over a period of time. In life there will be many contracts but as long as you pay, you will remain in good standing. If not, there will be fees for breaking contracts and late payments.
Apply for a Credit Card
Expect to get denied the first time you apply for a credit card. Credit card companies will send a letter stating to apply at another time. If you contact the credit card company stating that you will make payments and remain in good standing they will approve you the second time. One credit card is all you need to establish credit. Department stores offer a discount the first time you open a credit card but the “one year no-interest” advertisement is one reason why so many Americans are in debt. It’s not the worst thing to apply at a department store, but it’s definitely not good for someone starting off. Most credit card companies will have a limit of $200 that will increase in less than a year if you pay your bills on time.