SUMMARY: Learn why it’s time to start building good credit. We outline why building good credit early is important and how to go about doing it.
A good credit score isn’t something that happens by accident. It’s also not something that can be built overnight. Working to build credit while young — say, when you’re in your early 20s — can ensure you have a solid credit score by the time you’re ready to buy a car or home. One of the best ways to build good credit is to get a TDECU credit card.
Why do you even need good credit?
For young people, a future that includes a house or a new car can feel too far off to plan for today, but large purchases are just one reason to build good credit. Here are some other benefits having a good credit score can get you here and now:
- Preference over others when trying to lease an apartment or house
- A lower credit card interest rate
- A higher spending limit on credit cards
- Utility hookups without a cash security deposit
- Better car insurance rates
How to build good credit early
There are a number of ways young people can go about building up their credit score. Getting a credit card is probably the best. How old do you have to be to get a credit card? Just 18, so anyone in their 20s is technically eligible for one. A good option if you drive regularly is a fuel card like TDECU’s Buc-ee’s credit card. If you’re not sure you’d qualify for that particular credit card, choose a starter credit card.
Once you go through the process and receive TDECU credit card approval, commit to using your credit card wisely. Be sure to either pay it off each month or carry a low balance. Maxing out a credit card will affect your credit score negatively, which will cost you financially and take time to fix.
Another way to build good credit early is to pay your school loans on time every single month. Routine monthly payments that lower debt show creditors that you’re reliable in paying back a loan.
Lastly, always pay your utility bills on time and in full, including your cell phone bill. There’s one caveat with this piece of advice: paying your bills on time each month will only benefit your credit score if the utilities are in your name.
Building good credit is something every young person should endeavor to do, even if they can’t yet imagine needing it. Contact TDECU today to find out more about building a good credit score.