Whether you’re applying for a mortgage, a car loan or even a payday loan, personal credit is perhaps the most important aspect of the application process. A high credit score is your ticket to getting a loan with a decent interest rate. Though some lenders, such as the ones that are part of Money Mutual’s network of participating lenders, may not require you to have a good credit score, most lenders consider this to be of high importance. Recently, many financial institutions have raised their standards and are even stricter when it comes to credit score. Unfortunately for young people just starting out, it’s going to be increasingly more difficult for them to get a loan because they have not had time to establish credit. So, if you’re a younger individual or the parent of someone just starting out, here is some information on how to start building credit.
Focus on applying for credit cards or building credit in some other form that is relatively easy to get. Don’t be too ambitious trying to apply for a big mortgage or luxury car loan. The key is to take it slow at first by applying for things such as secured credit cards, retail store cards or a subprime credit card. Some young people start small with a revolving gas station card since they have small credit limits and are relatively difficult to overuse.
Another option if you’re trying to build credit is to share an account with someone in the family or a trustworthy friend. Ask a parent to co-sign on a credit card account with you or see if someone will add you as an authorized user on their account. Just remember this requires a certain amount of trust. If the other person abuses the credit on the account, it will affect your credit score as well as theirs.
If you’re a young person, chances are you’re pretty savvy on the computer and can maneuver around the internet like a pro. Parents, encourage use of the internet as a means to keep track of finances such as budgeting, banking, credit cards, checking your credit and more. There’s a reason companies like Bank of America and Money Mutual offer online services. It’s easier, faster, safer and more secure. Especially if you’ve entered into an account with someone else (such as a co-sign on a credit card), having account access online and payment alerts allows you to monitor spending and payment status from both parties.
If you take the right steps to properly manage your credit from the very beginning, you’ll be on the path to good credit and a great future.
