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What should I do to make sure I have a good credit score?
I want to have a good credit score early in life, I just don't know how to get a good credit score
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5 answers
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Liam’s Answer
The most boring advice is the correct advice: Don't buy what you can't afford.
I know you didn't want to hear it but in essence its true! Keep your borrowed money to an absolute minimum. You will need a loan for an education, a car, and a house. Other than that don't borrow money. Save as much as you humanly can. Keep as much money as you can in reserve and spend what you need.
When you take out a loan and pay it back, this builds credit. Again any of the three loans I listed are enough to get you a line of credit. If not, get a credit card, take the money you already have, purchase an item using the credit card, and pay back the full amount immediately. Get good habits like not eating out, cut back on subscriptions, curb automatic payments to services you don't use, and don't buy anything that is not useful to you.
Other than the basics, your credit score will go up and down constantly. Its more of an art than a science so be smart and try to figure out how you can best keep your score high!
https://www.khanacademy.org/college-careers-more/financial-literacy
https://www.youtube.com/live/vpUUqIBpR9Q
https://a.co/d/00xNmsO6
I know you didn't want to hear it but in essence its true! Keep your borrowed money to an absolute minimum. You will need a loan for an education, a car, and a house. Other than that don't borrow money. Save as much as you humanly can. Keep as much money as you can in reserve and spend what you need.
When you take out a loan and pay it back, this builds credit. Again any of the three loans I listed are enough to get you a line of credit. If not, get a credit card, take the money you already have, purchase an item using the credit card, and pay back the full amount immediately. Get good habits like not eating out, cut back on subscriptions, curb automatic payments to services you don't use, and don't buy anything that is not useful to you.
Other than the basics, your credit score will go up and down constantly. Its more of an art than a science so be smart and try to figure out how you can best keep your score high!
Liam recommends the following next steps:
Updated
Jezlea’s Answer
Hi Francis! It's awesome that you're thinking about this early! Here are some tips: try to pay off your credit card in full each month, but if you can't, at least make the minimum payment. Also, never go over your credit limit. Remember, the longer you keep your account open, the better it is for your credit score.
Updated
Shawn’s Answer
Hi Francis,
Great question, and a very important one for the entirety of your life! First thing I would do to start on the right track is to open up a small credit line credit card (when you turn 18) and use it for, let's say, gas for your vehicle - pay it off every month. This will get your credit going strong showing that you are great borrower! Also, never miss a payment of any kind and always live within your means - do not outspend your income.
Cheers!
Great question, and a very important one for the entirety of your life! First thing I would do to start on the right track is to open up a small credit line credit card (when you turn 18) and use it for, let's say, gas for your vehicle - pay it off every month. This will get your credit going strong showing that you are great borrower! Also, never miss a payment of any kind and always live within your means - do not outspend your income.
Cheers!
Updated
Christopher’s Answer
To build good credit, start by creating a credit history. You can do this by becoming an authorized user on a parent's account or getting a starter credit card at 18.
Once you have credit, follow these steps:
1. Always pay your bills on time.
2. Keep your credit card balance low compared to your credit limit.
3. Pay off your full statement balance each month to avoid interest charges.
Regularly check your credit score to track your progress. These steps will help you build strong credit.
Once you have credit, follow these steps:
1. Always pay your bills on time.
2. Keep your credit card balance low compared to your credit limit.
3. Pay off your full statement balance each month to avoid interest charges.
Regularly check your credit score to track your progress. These steps will help you build strong credit.
Updated
George’s Answer
A quick search will show you that five factors affect your credit score. It's a complicated formula, and different systems can give different scores. It's not always exact and can change based on when and what information is reported to the credit bureaus.
1. Payment history makes up 35% of your score. Always pay on time. Paying in full doesn't necessarily help, but carrying a balance can lead to high-interest charges.
2. Credit utilization is 30% of your score. Try to keep your balance below 30% of your credit limit. Lower utilization is better.
3. Credit history accounts for 15% of your score. Having accounts open for a long time is better.
4. Different types of credit make up 10% of your score. It's good to show that you can manage various accounts, such as credit cards, installment loans, student loans, and mortgages.
5. New credit is 10% of your score. Opening new accounts occasionally is fine, but opening too many at once can lower your score.
The first two factors, payment history and utilization rate, are the most important, and you can control them. The other three take time and good debt management.
1. Payment history makes up 35% of your score. Always pay on time. Paying in full doesn't necessarily help, but carrying a balance can lead to high-interest charges.
2. Credit utilization is 30% of your score. Try to keep your balance below 30% of your credit limit. Lower utilization is better.
3. Credit history accounts for 15% of your score. Having accounts open for a long time is better.
4. Different types of credit make up 10% of your score. It's good to show that you can manage various accounts, such as credit cards, installment loans, student loans, and mortgages.
5. New credit is 10% of your score. Opening new accounts occasionally is fine, but opening too many at once can lower your score.
The first two factors, payment history and utilization rate, are the most important, and you can control them. The other three take time and good debt management.