It is important to build credit in American society starting at a very young age. The reason that it is increasingly important to build credit is because of the standard developmental stages American adolescents and young adults go through. After leaving home, a majority of American children go on to college. In order to be able to afford the expensive items (like textbooks) and the fun activities (like Spring break trips), it is sometimes necessary to rely on credit. If you build credit early, it will be there to access during your starving college years, when you may need it most. After college almost always comes a car, a family and a house, all of which bring their own financial obligations and each of which requires that you increasingly build credit which reflects your stages of growth. Build credit starting with your first car The first car that most teenagers have is usually paid for by a parent or bought with cash earned from a part time job. Because of this, it may seem impossible to build credit using your first car, but this isnt true. One of the easiest credit cards to obtain is the gas card. By putting all of your first cars gas onto a gas card and paying the card off every month, you can build credit before youve even grown up and moved out of the house. In todays society, it is often also common for the first car to come with a first cell phone, so that parents can keep track of mobile teens. Ask your parents to include your name on the cell phone contract in order to build credit faster. Build credit by shopping Most teens like to shop and this can be a good thing if done properly. Department store cards are relatively easy to obtain, especially with a parent co-signing. They have low credit limits which makes them good for people who are just learning how to use credit cards. You can build credit by using a department store credit card in the same manner as the gas card. Build credit throughout your lifetime As you prove that you can pay off your gas or department store card, you will build credit. As you build credit, you can begin to apply for other credit cards and private loans. As your credit line increases, you build credit. What you want to remember is that you are going to build credit throughout your entire lifetime. This means that you want to build credit history which is positive and reflects your credibility as a borrower. If you build credit that increases in strength over time, you will be able to meet the increasing financial demands that come with new developmental stages. Basic steps to build credit you want to have You want to build credit which reflects your credibility as a borrower. In order to build credit of this kind, you will want to follow a few simple rules. The first is to make sure that you pay off the balance of each credit card in full at the end of each month. If you are not going to be able to do this, you should think about whether or not the purchase is important. If indeed it is (semester textbooks, for example), then you should pay the balance off as quickly as possible. Other keys to build credit are to always make payment early or on time, to make sure to always stay within your given credit limit, and to avoid applying for numerous credit cards. Regular monitoring of your credit report is also important because, once you build credit, you dont want it destroyed by computer errors or, worse yet, identity theft. |
