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Building credit is increasingly becoming an essential part to adulthood. What are the main things an individual must know when initially building credit?

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Paying your bills on or before time everytime. Paying your bills late will bring it down. Only get things that you can afford to pay for. Do not pay for everything with cash.(Meaning use a card or something, because it is constant and consistent paying that builds your credit). Start low or easy, do not start with a thousand bills, start with one or two, that you can handle. Uniququa S. Translate
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Jeff’s Answer

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Some of the most important things to know is to realize you want a long history of not using more credit than you can handle. I’ve advised many young people with their first apartments that they can establish credit history my getting a utility bill in their name (possibly with a cosigner) and make sure it’s paid on time. It’s most likely that it will be paid on time if it’s set to automatically withdraw the entire amount from someone’s checking account. If you have multiple roommates, have at least one bill in each person’s name and a mandatory meeting on the first of each month to square up the difference from last month’s bills. If you have credit cards, set them to all pay off in full from your checking account at the end of the month. This will force you to not carry a balance and always have more credit than you are using. Most agencies consider credit cards balances that are too close to the limited as maxed out and seriously hurt your credit rating.

Jeff recommends the following next steps:

  • Set up credit cards to pay off in full automatically from your checking account each month
  • Check the balance to make sure you never have more usage than money available.
  • Set up utilities to pay off in full each month from your checking account.
  • If you have roommates, have a different utility in each person’s name, set each one to pay off in full. and meet each month to settle the difference.
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Roger’s Answer

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There are very few things in life that I am really good or great at. But, I do enjoy a PERFECT "850" FICO Credit score. I’ve had nearly perfect credit for most of my life. I got my first VISA card when I was a junior in college. I had a $500 credit limit. When I got my first VISA bill for $100 for gas, beer, movies.... I sent VISA $1000 to pay a $100 bill. And, I had a "credit" for months where VISA actually owed me money because I had money in reserve on my VISA by paying far more than the actual bill.  (I still do this today... if my American Express bill is $5000 --  I send AMEX $7500.)  Paying MORE than your actual bill helps you with your "credit utilization score" which is a large portion of your overall FICO Credit Score.    To earn good credit, pay your bills way ahead of time, pay more than the actual bill, and never spend MORE than what you make.

Great advice above! Building your credit is basically establishing your future. If you can show that you have good character and pay bills on time then it will help you in future with getting loans with lower interest rates. It might be the difference in you getting a job you really want as a lot of employers pull your credit. If they see you are paying on time and not getting overextended with credit card debt it will give them a favorable impression of you. So start slow with what you can afford and get credit card and then build yourself up with paying like rent on time for an apartment and car loans etc. Show steady progression of being able to pay credit card on time and than that you proved you could handle rent and an auto loan. Brian Downey Translate
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Katya’s Answer

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when I think of my first credit card and it wasn’t by far the best experience due to lack of knowledge . I wish someone explained to me the differences on credit card types.

for example- it’s important to find credit cards that offer zero interest rate for a least 12-15 months. It will allow to use the card, build your credit history and not pay any additional interest fee.

I think the number one when it comes to building credit is to use credit wisely- meaning- use it only when you need it. always pay your bill on time- must make the monthly minimum payments-in order to avoid any late fees and additional accrued interest. because in reality- if you buy something for $100 and after 3 months end up paying more around let’s say $150- then it might not be the best option to use credit cards that have high interest rate.

To avoid any late payments- always make sure that you set up an online bill payment- if you want to make additional payments on your credit card- you can always and it’s also a good way to repay the remaining debt.

your debt to income ratio should be 40% aside from your income and never more- you don’t want to start spending your entire paycheck on credit card payments and interests.

always- check to see your credit score and if there are any inquiries done - you should not have more then 3-4 credit cards and only use the ones that hav egrets rewards such as cash back, travel, miles- all depending on your need.
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