The first time I was asked about my credit, I was 18 years old, trying to finance a new phone. When they asked me, I was shocked. Having good credit was necessary for buying a house or car, not all these other things. Right?
W-R-O-N-G.
Nowadays, credit is needed for everything as simple as financing a phone to financing a mortgage.
As someone who is of legal age, you are considered a real adult, and you are expected to have credit to buy or finance a lot of things. The good news is that you have years to get your credit ready for large financial obligations like mortgages and car loans. But the bad news is that credit takes some time to build.
Anyway, here are my tips to start building credit the day you turn 18.
- Free: Ask your parents to add you on their credit card as an authorized user.
Even if you don’t spend a dime on their card, your parents good financial decisions could reflect on your credit. By simply adding you to their account, your credit instantly gets a boost. This option, however, isn’t viable for some. If your parents don’t have particularly great credit, or if you’d rather take matters into your own hands (I know I did!), there’s always a secured credit card.
- $50-$200: Secured Credit Cards
A secured credit card is simply a card that requires a deposit before you are given credit. Think of it as a credit card with training wheels on it. This type of credit card also works well for people that for some reason or another have low credit. The deposit you can put down on the card usually correlates with the limit you are awarded. The more you deposit, the higher your credit line is. The only downside of the secured credit card is that many times it doesn’t offer the fancy perks you normally get, like points to spend or cash back. But it does give you time to figure out what kind of perks you would need from your credit cards in the future.
I myself started out with a Capitol One secured credit card when I was 19, in order to build credit for a car loan. My deposit was about $50, and that was enough to get me going. My experience with them has been great over the years!
- Free: Student Credit Cards
Student credit cards offer great opportunities for those that are in college. As promising as they sound, I would still recommend a secured credit card for young adults with no credit. Why? Because it’s a lot easier to be approved for a secured card than it is for a student card.
Most banks that offer student credit cards expect you to at least have some credit or significant income. And you don’t want an inquiry on your record without an account to show for it. Student cards are a lot like regular cards, except the perks center around college life. What happens when you’re no longer in college and the perks no longer apply to you? Closing your oldest account means that your credit would take a big hit.
There are some student cards that offer benefits useful long after graduating. Of course, only you truly know what’s best for your finances, so I recommend looking into what each card has to offer and pick one based on your needs and preferences. I hope this article gave you some ideas on where to begin your credit journey!
