For many people, especially recent high school and college graduates, the question of how to start your credit history might be on your mind. You will start off with no credit since you have been living with parents and likely making any and all purchases with cash, checks and debit cards. But now that you are entering a new stage of life, you will probably want to know how to start your credit history. Remember that credit is a privilege and should be used responsibly.
Your goal is to have a credit score on the upper end so that you will save money when taking out car and home loans and getting insurance policies. Your credit score won’t increase dramatically with any one action so expect it to take some time and make sure you make all credit card and loan payments early or on time to avoid damaging your credit score and racking up late fees and interest.
The easiest way to start building credit is to get some kind of credit card and use it wisely. Here are three kinds of cards that you can consider getting and using on a regular basis.
Secured Credit Cards – Secured cards are almost always approved because you have to put down money upfront, which the company keeps if you don’t make your payments per the card agreement. It is common to put down $250 to $500 for such a card and after about a year of making on time payments, the credit card company will change your card over to a regular credit card.
Department Store Cards – Nearly every large department store has their own credit card available to customers. They often offer a discount on purchases that you make on the day you apply for the card. So, if you have been wanting to do some serious shopping, wait for a sale and then apply for a store card when you checkout. This will save you money on the items and then you will have another card with which you can build your credit history.
Gas Cards – Since most people have cars and buy gas on a regular basis, it’s a good idea to have a gas credit card to help build your credit. They often offer a discount or rebate on gas purchases made with the card.
Use these ideas on how to start your credit history today, apply for a card right now and over time your credit will grow higher and higher, assuming you continue to use credit wisely.