The Newcomers Guide to Building Credit


Most 18-year-olds aren’t thinking about building credit. Most likely, they’re considering where to go to college—or how to spend a Friday evening. Many don’t know what credit is, or why it’s so important. But it’s never too early to get stated building your credit profile.

A fantastic credit score is essential to your financial future. Without it, you may be turned down for an auto or business loan, a mortgage, or a credit card. This may not seem critical now, but you’ll care about that a few years down the road—trust us.

Luckily, it’s extremely easy to start building your credit. Here’s how to get started.

Apply for a Secure Credit Card

The easiest way to start building credit is to apply for a credit card. The problem: most credit card companies won’t issue you a card unless you already have credit in your name. So how do you get around this Catch-22?

A secured credit card allows you to put down a deposit at your bank to serve as your credit limit. For example, a $1K deposit becomes a $1K line of credit.

When starting out, make sure to use your credit card sparingly with small purchases throughout the month. And—we can’t stress this enough—pay your bills on time. This will allow you to start building credit while showing your bank that you are a responsible spender.

Become an Authorized User

This is one of our favorite tricks. You can actually join a friend, relative, or loved one’s account as an authorized credit card user—allowing you absorb their entire payment history.

If you become an authorized user on your Dad’s account, who has been building credit for 30 years and has an awesome score, you now have the benefit of his payment history in your name. And the banks won’t know the difference!

Apply for a Credit Card

After you’ve used your secure credit card responsibly for a few months, it’s time to apply for an unsecure credit card (think Visa, MasterCard, Amex). As you continue to pay your bills on time, you’ll quickly build up a strong credit report that allows you the best financial possibilities for your future—filled with cars, homes, etc.

You can also apply for a department store card from places like Macy’s or Bloomingdale’s. They’ll offer you a small line of credit at their locations, which serves as a great basis for opening up bigger lines.

Don’t wait until you’re ready to buy a house to start thinking about your credit. Start early. To learn more about how to start building your credit profile, book Anthony Davenport to speak at your next event, or schedule an appointment with Regal Financial today.