No one masters driving in a day, you have to learn to drive by reading and then doing. You can do something similar with your credit, building up a good credit score takes time but it is worth it as with careful control your credit score will save you money for years to come
Bank Accounts
Have at most two accounts and put money into them regularly (even small amounts are ok as long as you do them regularly), have one of them as your savings account and have deposits made automatically from your primary account into your savings account. As well as helping you build a nest egg for future purchases it shows that you want to save money and are used to regular commitments and when you apply for a credit card the bank will see this as a sign of financial maturity.
Take Small Steps
Get A Phone
As soon as you hit 18 you should get your own phone, even if you have to put down a deposit for it (carriers ask for this as you do not have any credit history). Do not go crazy and get one that is more than you can realistically afford or else you will be creating problems for yourself. What you are looking for is a monthly bill in your name, something to show you are in charge of your own finances.
Avoid Store Cards
If you like to shop at the same stores all the time it may be tempting to get a store card, especially when they offer you ten percent off your first purchase. Do not get a store credit card, just because it is easy to get the card it doesnt mean that it is good for your credit score. Many people consider store cards to be junk credit, they can be hard to get rid of and once you have them you will be bombarded with offers. The only time to get a store card is when you are absolutely sure that you will pay if off straight away and then leave it at home (one person i know stores their credit cards in a block of ice in the freezer).
An example of a good use of a store card was when my wife bought a new suite costing over a thousand dollars and saved 15% by opening a store card. She opened it, then paid it off in the store straight away, the ten minutes of extra work saved us one hundred and fifty dollars. Signing up for a store credit card to save 2 dollars makes no sense, but saving hundred dollars plus sweetens the deal somewhat.
Credit Can Be Ruined Quickly
Once you hit eighteen (and often before) you will find that you get bombarded with offers for credit cards. It may seem like fun to apply to all of them and get half a dozen credit cards of your very own. What harm can it do if you never use all of them? Well the answer is a lot of damage can be done by lots of credit applications going in all at once. You could ruin your credit score in one weekend of what you think is innocent fun, once damaged it will take years for you to regain a good credit rating.
Credit Is A Serious Matter
Because it is not something you can see and you do not get letters from the government about it people tend to ignore their credit score. This is a huge mistake as your credit score affects more of your adult life than you would ever expect so you should take care of it. What kind of things are affected by your credit score
- car insurance
- home insurance
- mortgage rate
- personal loan rate
- buying a car on credit
- credit card rate
- apartment rental prices
You can see how important it is to not only learn how to get credit but how to manage credit and treat it with respect. Start small and nurture it, think twice before putting anything onto a credit card that you are not absolutely certain you can pay off when the bill comes in.
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