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SUNDAY, APRIL 3, 2016 |
Sponsored Newspapers In Education Content
ON THE ROAD TO BEING ON YOUR OWN
CREDIT 101
BUILDING CREDIT: GETTING STARTED
Someday soon you may want to buy a car—or start thinking about buying a house. Chances are,
that’ll involve applying for a loan. That’s why it’s important to start building good credit as soon as
possible. A solid credit history, along with a good credit score, can help with loan approvals down
the line and may even lower your interest rate.
Credit Options For Teens
Co-signed Credit Cards
If you’re at least 18 years old, one way to start building credit is to ask a parent or other financially-responsible
adult to be a co-signer on a credit card. It’s important to keep in mind that, in a co-signer relationship,
you (the teen) are responsible for making payments. If you don’t, your co-signer will be
expected to pay the balance and it could impact their credit score.
Secured Credit Cards
Another option for anyone 18 or over is a secured credit card—which has an intentionally
low limit. (If you’ve applied for an unsecured credit card and were declined, you may
have been offered this type of card.) With a secured card, you’re required to make a
deposit into an account as collateral (usually $200-$500), and can charge up to that
limit. Since your payments will be reported to credit reporting agencies, it’s an ideal
opportunity to build positive credit history.
Remember: A good rule of thumb is to use no more than 30 percent
of the total credit available to you.
Student Credit Cards
If you’re enrolled in school, a variety of student credit cards are available
that require little to no credit history. These usually have low limits to keep
students from racking up huge debt. You’ll be required to make monthly
payments, but may still need a parent (or other creditworthy individual)
to co-sign or jointly apply if you’re under 21.
Want to build credit—without getting a credit card?
If credit cards aren’t a good fit for you, there are other ways to
build a credit history.
Secured loans
With a secured loan, you pledge a specific asset (like a car or house)
that the lender can seize if the loan isn’t repaid.
Rent
Ask your landlord about reporting your on-time payments to
credit bureaus.
Utility, cable and cell phone bills
As of April 2015, “alternative payment data” will be factored
into your FICO credit score.
