What is the Right Age to Start Building Credit?

Establishing good credit is central to reaching important financial milestones, such as buying a home or a car. Credit can also affect employment, rent and insurance rates. A good credit score is not only the difference between being approved or declined for a loan, but it also has a large impact on the rates you pay. In fact, maintaining good credit can save you tens of thousands of dollars during your lifetime. But when is the right time to start building credit? And what is the best way to start?

At the credit union, we recommend that people start building credit at age 18. Establishing credit at the age of 18 is a good start because a person cannot legally obtain debt prior to this age. In fact, having credit established before 18 can trigger fraud alerts, as identity theft of minors is a leading strategy of fraudsters. This is also a great time to introduce a person to  monitoring their credit report to ensure there are no mistakes or fraud.

If you’re not sure where to start, you’re not alone. The fundamentals of finance and money management are no longer a taught in many school systems so it’s more important than ever for parents to lead the way. Start your kids young with a youth savings account to give them the foundation that they need for the future.

If you are eager to start building credit, start with a checking account. While this doesn’t directly impact your credit score, it’s a good way to establish sound financial habits. A good credit score is a result of good financial habits. Having an established checking account, regularly monitoring your spending activity, budgeting and staying within your means will reflect in how you build your credit score.

While a credit card is an clear way to start building credit, it’s important to start small. Get a low-rate credit card with a small spending limit, buy some gas on that credit card and then pay it off every month. This will help you get into the habit of using a credit card to your advantage. The credit union also offers a BlueSecure Credit Card which gives people with colorful credit the convenience of a credit card while building credit history at the same time. It’s a safe way to build your credit.

The key to building a good credit profile is simple: don’t take on more debt than you can support, pay your debt on time, keep unsecured balances low, and continually pay them off. Having good credit will give you the confidence to buy the car you want, purchase your dream house, and live a stress-free life.

Stay Well,

Chelsea Springli

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