Credit is important to have in your background if you want a house or a car. Getting good credit may be hard to achievable but it is possible. It is important to start building your credit when you are young so you are able to support your family.
Start by building a credit history with little things. Getting a credit card at 18 may be a good choice if you are responsible. Usually by the time you are 18 you are able to apply for many different credit cards yourself. You can start by getting one card and using it on things you need. It is beneficial to you as a young adult to only charge $20-$50 a month depending on what you are able to pay for. The longer you build your credit history for, the quicker you can raise your credit score.
You should never charge more money on your credit card then what you have. Sometimes when you apply for a credit card you must have previous card. This may be hard for some people if they have never had a credit card before. You can ask your parents to co-sign a credit card for you. This way, they will look at the parent's credit instead of the young adults. By doing this, the parents are responsible for paying the bill when their child can't. Some parents may not agree to do this but it may be the only way to build your credit.
If you are having troubles applying for a credit card you can try a pre-paid credit card. This is not recommended since there are fees associated when adding money to your card. Unfortunately, for people with bad credit or no credit this may be the only way.
As you get older you will start to have more bills. You may have to pay electric bills, cell phones, internet bills and rent. All of these bills will help you build your credit. If you do not have a credit card yet, the best way to get one is at a bank. Banks are usually more willing to give out credit cards because they will make sure you have the money in your account before you pay for it. Even if you aren't using a credit card to pay your bills, you are still building credit since all of the bills listed above is being put on your credit history.
When trying to get a big item such as a loan for a car or a house, people will look at your credit history and see if you are a good candidate to have a loan from them or not.
When applying for a credit card look at the annual percentage rate, the monthly or annual cost and your credit limit. Each company will have a different annual percentage rate and it is important to find out what it is before charging anything to the card, just in case you are unable to pay the full amount each month. Also, some credit card companies charge monthly or annual fees for using the cards. It is beneficial for you to find a card that doesn't have a cost since there are many out there. Find out what your credit limit is. If you credit limit is only $100 then you may want to go with a different card since that is not very much. Never charge more than half of what your credit limit is. Just because you have $3,000 credit limit and you have $2,000 cash you should still be wise when charging items. Spending over half of your credit limit may lower your credit score. The loaners look at what percentage of your credit limit you are using each month. If you want to charge an expensive item you can pay a portion of it in cash and charge the other portion of it on your credit card.
It is important to remember that one late payment not only costs you money, but it also lowers your credit score. Being late on a payment costs you a finance charge. The fee of this charge will vary depending on the company. It also lowers your credit score which puts you at risk for getting a loan in the future.
It is helpful to save first. Although people try to only charge what they can pay for sometimes they go overboard not realizing they don't have enough. It is helpful for you keep cash with you and if you charge $10 make sure you put $10 cash in an envelope to make that payment and so on. Keep collecting your cash in your envelope until your bill comes due. This way you will have all of the cash needed to pay off your entire credit card bill.
You should also take a loan out for the shortest amount of time you are able to. It is understandable if you need to take out a loan on a large item for a few years, but you should never go longer than you have to. Also, making larger payments to get your item paid off will greatly help your credit score. If you pay the company who is loaning you the money more than what is expected they will be impressed and you will be able to find this on your credit history.
While credit is important to build, if you feel irresponsible about using a credit card then it is best you don't. While just forgetting to pay a bill seems minor it can mess up your credit history which can be hard to build. When applying and using your credit card it is important to be smart and think wisely. You can check your credit score by contacting credit services. They will be able to tell you what your current credit score is and may also be able to give you additional tips on raising your score. Be careful not to call to find out your credit score too often as it could cause your score to decrease.