Thu 8 Feb 2007
Who: This post is for young folks who either do not have a credit card or for those who do have a credit card and are just starting to build their credit history.
What: This is an elementary post about building and maintaining a strong history. The focus of this post will be on how college students and other young professionals can get their credit ready for approval of a mortgage or another loan in the future.
Building a credit history takes time, consistency, and responsibility. I will already assume that you know why having a solid credit history and credit score is important. If you don’t, you’ll want to be sure you stay tuned for some upcoming posts about credit reports and credit scores.
So, how do you build a credit history?
It takes time. BE PATIENT. Just like you would not make an investment decision based on a short period of historical performance, credit companies will not make decisions about your creditworthiness based on a short history. There are many time related factors that affect your credit rating and they include (but are not limited to), age of oldest account and average account age.
What does this mean? It means you should get a credit card as soon as you can. This comes with the important caveat that you should not get a credit card if you will not be responsible with it. If you think you can be responsible, you should get a credit card ASAP. It doesn’t matter if you use it sparingly, just having an account on your credit report that is a half decade old once you’re out of college will be very helpful.
Be responsible. Pay on time, all the time. Late payments go on your credit report so make sure that you never miss a payment. With one credit card, this is very easy. Just put a post it note on your desk that has the date your statement closes and the date that the payment is due. I won’t go into all the different ways to remember, but I will just say that you should not miss any payments!
That’s it, seriously!
As I said before, it just takes some responsibility and some time to build an excellent credit history. Keep in mind that there are many ways to keep your credit in tip top shape that are bit more complicated than the steps mentioned here, but this is just an introduction for the young folks out there.
If you’re a college student and you’re looking for a card to build your credit history with and earn great rewards at the same time, there is no card that I would recommend more highly than the Citi mtvU Plainum Visa Card.
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