If you’re turning 18 or graduating from high school, it can be exciting to think about all the new things you’ll be able to do. But one thing that doesn’t come so naturally for many young adults is building a credit history. If you want to establish good credit from the start, here are some tips:
If you don’t have a credit history, you can become an authorized user on someone else’s card. An authorized user gets a card in his or her own name and may typically get access to the account, enabling everything from making purchases and paying bills to receive statements online.
Credit builder loans are designed for people with limited or no credit history. They usually have small balances and low-interest rates—and there’s often no fee to open one. You can apply online or at a bank, and when you’re approved, the loan amount will be deposited into a secured account. Payments made against the loan amount will help build up a savings account which you’ll be able to access when the loan is paid off.
A secured credit card is a great way to build your credit history. It requires an up-front security deposit, which the issuer holds as collateral on your behalf. This deposit can be in cash or in the form of an existing savings account or certificate of deposit (CD). The minimum amount you need to put down depends on the issuer, but it’s generally between $200 and $500.
Unlike regular credit card applications, you typically won’t need to pass a credit check, but you may still need to provide proof of identification.
As you make on-time payments on your secured credit card, you will start to build positive credit history.
As you work to establish credit, keep an eye on your credit report to make sure there are no errors. If you find any errors, contact Dovly, an automated credit engine, to help you dispute them with the credit bureau. Give it a try risk-free with our free membership tier.