by Chelsea Springli 
Establishing good credit is central to reaching important financial milestones, like buying a home or a car. Credit can also affect things like getting a job, applying for an apartment, your insurance rates and more.
Not only is a good credit score the difference between being approved or declined for a loan, but it also has a large impact on the rates you pay. In fact, maintaining good credit can save you tens of thousands of dollars during your lifetime. But when is the right time to start building credit? And what is the best way to start?
Start as Young as You Can
At the credit union, we recommend that people start building credit at age 18. Establishing credit at this age is a good start because a person cannot legally obtain debt prior to this age. In fact, having credit established before you are 18 years old can trigger fraud alerts. Identity theft of minors is a leading strategy of fraudsters. This is also a great time to familiarize yourself with a credit monitoring service to ensure that there are no mistakes or fraud on your credit report.
Be an Authorized User
Your credit history and score are influenced by a variety of factors about your payment history, types of loans, and more. One way to build credit as you’re just starting is to be an authorized user of a trusted family member’s credit card or other loan. The key to making this work for you is that the primary credit card user must pay at least their minimum balance, if not the entire balance, every month. One mistake can dramatically set you back since you don’t have credit history to rely on. If you use this option, make sure to clearly establish boundaries and guidelines before being added to the credit card.
When I bought my first car, I had essentially no credit history and had my dad cosign for me to avoid a high interest rate. We agreed beforehand that I’d make all the monthly payments on time. If I failed, we’d refinance and remove his name from the loan. Since we both had clear expectations, it created a smooth experience for getting the loan and making my payment every month.
Open a Credit Card
While a credit card is a clear way to start building credit, it’s important to start small. Start off with a low-rate credit card with a small spending limit. Then use the card for routine purchases like gas or groceries and pay it off in full every month. This will help you get into the habit of using a credit card to build your credit score without getting over your head in debt. It takes time to build your credit, so be patient as you start this process.
Pay Off Your Student Loans
According to SoFi, around half of undergraduate college students take out some kind of student loan. If you’re one of these students, paying off your student loan balance will help grow your credit history. Making at least your minimum payments on time will help improve your credit score too. Not counting the federal student loan payment pause during the pandemic, my husband has been paying off his student loans for five years. We’ve been able to watch him maintain a good credit score because of his timely payments.
Let’s Build Your Credit
The key to building a good credit profile is simple: don’t take on more debt than you can support, pay your debt on time, keep unsecured balances low, and continually pay them off. Having good credit will give you the confidence to buy the car you want, purchase your dream house, and live a stress-free life.
