Although many people believe that building credit before getting into college is not a priority, the thing is that everybody should have a decent credit score before going out into real life.
Obviously, kids under 18 years old are less likely to start building a good credit score, but up to 18 years old, the benefits of creating an outstanding score are undoubtedly impressive.
We, at Safe Loan, understand the importance of building the financial foundation of the future of young people.
Naturally, in order to achieve this, it’s necessary to think in a savings-oriented way.
But this is not always easy for all of us. In fact, the majority of us maybe didn’t care about credit scores back then.
Now, we understand the importance of having a good credit score to get installment loans approved fast and with decent interest rates.
Still, it’s fundamental for us to educate teenagers and young people regarding the benefits of increasing their credit scores from scratch. Every significant accomplishment begins with a little step, so after reading this article, you will know:
- How to build credit at 18.
- The importance of having a good credit score.
- Tips to prepare for your financial future.
Why is it important to build credit from a young age?
It’s not a secret to anyone that having a good credit score can impact several aspects of future adult life.
The first thing whenever we want to borrow money from a lender is the credit score.
Of course, there are many options for young people to start building credit, such as credit cards and so on. But when the moment to apply for an installment loan comes, the best thing is to have all things set up and ready to go.
It’s important to remember that credit doesn’t need to be intimidating.
In most cases, it’s fundamental to receive help from the parents or another trusted adult for this task. Either way, here are four amazing tips to make your credit score look good for the upcoming future.
1- Open a Bank Account
If you haven’t set up a bank account yet, what are you waiting for?
Opening a savings or a checking account is the best way to start with the right foot. As young adults, 18-year-olds know that we live in a digital world.
Therefore, it is not necessary to go to a physical branch to open a new account. It can be opened really quickly from anywhere in the United States.
Many young people use their accounts to save money and to pay for regular things. Hence, it is necessary to identify the everyday expenses in order to start saving for tomorrow.
Remember that bank accounts are the best way to make payments for future credits. Besides, transferring money and paying on time is also a magnificent way to start building credit.
2- Receive your First Credit Card
Now it’s time to be on the lender’s radar by having a credit card. Opening a credit card translates into having a credit report in your name.
However, credit lines need to be used responsibly. If you are aware of the amount of money you can spend, then building credit will be a natural result of your daily transactions.
Don’t forget to pay off your balance in full every single month. Also, keep in mind to pay on time. If you fail to do this, your credit score will be seriously damaged in the future, so there are no exceptions to this!
3- Apply for Student Revolving Credit
Fortunately, there are different alternatives for students to get credit while in college.
Student credit cards are an option for young collegians to build credit during their student years.
Nonetheless, keep in mind that student credit cards come with high interest rates and low credit limits. You can also apply for student loans, but we only recommend this if you really need the money.
Still, most forms of student revolving credit are relatively easy to get.
4- Get a Small Loan
If you want to aim big, get a small loan!
Maybe you don’t need the money, or perhaps you do.
Whatever the case is, to build a good credit score history, you can grab a small loan to show lenders you can actually handle debt.
But remember that we do not recommend the loan to be large at all. A few thousand dollars is more than enough – consider that you are building credit, so it’s crucial to have absolute control over this amount of money.
Having a mix of credit reports, such as small loans and credit cards, will tell the lenders that, in the future, they can grant you bigger loans that you can use to fulfill your needs!
Benefits of being an 18-year-old with Good Credit
We all need a good credit score, not just 18-year-olds, but having a solid start in the financial world is the best way to go when it comes to our general wealth in the future.
Building a good credit history doesn’t need to be a rushed process. At the end of the day, young people have plenty of time to impress lenders and financial institutions.
If you are young and still don’t know if it’s good to start building credit as soon as possible, then these three benefits might change your mind:
- Renting apartments will be easier: landlords always look at the renter’s credit history and income. If we are talking about teenagers, having a good credit score is an enormous advantage.
- Better interest rates: when you start building credit, you’ll receive offers with lower interest rates if your credit score is good enough.
- Best job opportunities: some employers check credit scores, and if they have a young candidate with a good score, they will likely review him or her as a potentially responsible individual.
Definitely, creating a credit history is a task we should all do when we are young.
Either way, remember that the key is making payments on time and completing your duties as a borrower on time. If not, anything you did to build your score would be thrown away.