By now, we are all pretty familiar with the fact that buying a house, leasing a car, applying for a loan, and any other major financial process hinges pretty strongly on your credit score. Just because the economy is less than prime doesnt mean you should let your credit score slip and be victim to overwhelming debt. Its never too early to start planning for your financial future. Many young people today have had to use unpopular methods to build their credit, and here are some of their tips.
1. Start building your credit portfolio early. Debt is synonymous with student loans and building yourself up before you have a real income. By taking out a low limit credit card (they usually call YOU on your 18th birthday, no need to hunt them down) and opening a store card account, you can establish a history of on time payments and build your credit organically. However, now credit card companies are targeting in on 21 year olds thanks to the CARD act of 2009. If you have trouble taking out your own credit card, see if your parents will co-sign an account or let you piggy back on something of theirs to obtain history, such as co-signing for a car but having it primarily in your name.
If youve got self control, you can make all of your monthly purchases strictly with a credit card each month, and they pay them off with debit at the end of the month. This is a great way to build up account history, earn rewards points, and also extend your card limits.
Limit how many lines of credit you have open. Even if the accounts have zero balance, youre still a liability if youve got all these open accounts to play with. You want to have high credit limits and low balances, thats the trick to the credit game.
And last, be a thorough monitor of your credit report. Identity theft is everywhere these days, and you are the only one who can clarify what is legitimate and what is fraud.
If youve already found yourself overwhelmed with personal debt, then you should look into the assistance of a credit counselor. By negotiating interest rates, you could get a much more reasonable figure to work with and promptly pay off.
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