Where to Start Building Credit Without Credit

Building a good credit score, or any credit for that matter, is an important practice for all young adults and can be quick and easy.

Man paying with credit card on smart phone at home office building his credit Young adults find out fast that they need credit to do anything in the adult world. It is really easy to build once you know where to start.  But, no one gave a class on that in school, did they?  Here is some advice to get you started.

It all starts with a piece of plastic.

All of us grow up and have a vision of what we expect our lives to be like. We imagine the perfect job, home, car. I could go on and on about the “American Dream”.  Maybe you want to be a police officer with a three bedroom home, in California, with a reliable car.  All before you turn thirty.  This is possible.  Unfortunately, most of the time you don’t have the money to buy these things out right, even with a good reliable job. This is why you will need a good credit score that shows people you know how to spend your money, so they can trust you with some of theirs. You know, for that beautiful house in California. Where to start?  Seems like you need good credit for everything but you need credit history for that. The best way to start is with a credit card! Get a secured credit card.  You can go to any bank and apply.  This card is easier to get because you will put some of your own money down to get started.  The money you put down will become your credit limit. All you have to do now is use it, pay for things that you would normally use your debit card for and stay under that deposit.

Plastic, maybe, but not a toy.

You need to start building your credit because you will use your credit score for the rest of your life.  Landlords will check it, banks that lend you money will want to know it, and sometimes even your employers. Be careful with that little piece of plastic because it can hurt you just as fast as it started to help. You can ruin your credit easily, but all that can be avoided. Stay away from spending more than you have, don’t apply for too many credit cards, and ALWAYS pay your bill on time. These things will cause your score to flourish and, remember, all those dreams depend on it.

Never use your credit card for things you can’t afford.  It can be tempting to want to spend it like free money but you have to pay it back at the end of the month. Try to use it for monthly payments that you already pay every month and save the shopping spree for your savings. This way you always know what to expect when you get your bill.  It will be consistent and easy to keep track of.

Avoid applying for too many credit cards, even if it may save you 10% when you are checking out at Victoria’s whatever.  It can negatively affect your credit score. This is not a time to be impulsive.  Instead, try to get a card with good benefits and just use the one.  If you find you want to open another account, maybe to separate your finances, go ahead as long as you use both and pay them both off on time.  You will continue to boost your score.

No matter what you use your card for, how much you are spending, or where you got it, the most important thing to remember is to pay your bill on time. This is why you should spend only what you can afford because at the end of each month you get a bill from someone expecting their money back. If you don’t pay them, you will tarnish the reputation we just worked so hard to build.

What is my credit score?

Your credit score is a number between 300 and 830 that helps a lender make a decision on whether or not it is safe to lend you money or sell/rent something to you like a car or house. Simply put, the higher your number, the better your score. A good score might be 730.  This would show a lender that you pay your bills on time, would be a reliable person to lend money to and would probably qualify you for a lower interest rate. A bad credit score might be in the 550 range.  This would be a red flag to any lender, you probably don’t pay your bills on time, maybe you pay your credit cards off with other credit cards and have many outstanding balances. This would probably make someone hesitate to lend you the money you need because you have not paid back the money you already borrowed. If someone did lend you money, they would probably give you a high interest rate that would make what you are buying significantly more expensive. You can easily check your credit score online or using an app and there is always an option that is free. I would highly recommend always knowing your credit score.  Check it regularly, you will probably even get a summary of the activity that may be making it drop so you can adjust your spending behaviors. Start building your credit early.  Get a secured credit card, pay your bills on time, know your credit score and you will be in a great position whenever you decide you want to make your next life decision. There are many ways to further build your credit but you have to start somewhere. Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.