How to Build Your Credit

I posted something on my instastory a few weeks ago about accomplishing another goal of mine. My goal was to get my credit score above 800. I had a few people reach out to me after my post asking how I did it and how to build theirs. Let me just say I was hesitant to make this post because I thought people would think I was bragging, but a good friend of mine gave me the push that I needed and if you don’t like it, leave.

When I first started trying to build my credit I was so confused on how to build it or why I had to put myself into debt to build it. Not everyone has parents who help teach them & we all know the school systems failed us in real world skills so hopefully this helps & let me remind you I’m not an expert. I started by getting a small car loan. If you are paying your parents and the loan is in their name, GET IT IN YOUR NAME! Get on your own insurance. Get on your own phone plan. Start making your own monthly payments. Taking on debt and slowly making your monthly payments proves that you are capable of paying someone back. We start small and next time you will qualify for more. Opening my first credit cards was the next step.

BEFORE YOU DO THIS :

  • Research to find the best card(s) for you. Ones that you can keep long term because closing accounts is not a good thing.
    • For me I found a card that has really good cash back benefits but a higher interest rate because I never carry a balance on this card which means that I buy all my regular stuff that I would use my debit card for but I just pay it off each month so I get the cash back rewards but never interest.
    • I also have a really low interest not really any benefits card that I use for emergencies or larger things I might not be able to pay right away.
    • Another card that works great for me is the best buy card, I love it because they have deals where you have no interest for 2 years or 1 year different things like that. I purchased my camera on it and re-calculated what my payments needed to be to pay it off before I started getting interest charged.
  • Set boundaries for yourself. Do not let yourself go past the limits you set for yourself & keep a level head because it’s not free money you have to pay it back. Trust me when I say I learned from watching other people’s mistakes & its not fun to dig yourself out of a financial mess.

OTHER TIPS

  1. Always make your payments on time. Set up bill pay. Set phone reminders. Automatic payments are amazing. Whatever you need to do.
  2. There is an ebb and flow when it comes to building credit which means your credit score will go down when you open a new credit card or when you get a new car loan but on the back end of things when you’re paying it back it will grow your credit far beyond where it was prior.

My last and final tip….

DOWNLOAD THE CREDIT KARMA APP

It will assess your situation and give you tons of stats based off of your current situation it looks at your total number of accounts, credit history, credit card utilization, payment history etc. If you’re not sure where to start with looking at cards, it will have suggestions for you & other things you can do to improve your credit. They make everything super easy to understand & color coordinate from Red on the bad end to orange, yellow, light green to dark green which is good. Shout out to credit karma for helping me reach my goals!!

*I decided to add one section explaining why building your credit is important especially when you’re young. INTEREST RATES. Being 21 I think a lot of people are surprised by the car I drive but for me it’s a super easy payment to make and one of the things that plays into it is that I qualified for the lowest interest rate they even make for car loans. Another benefit is being financially set up for those of you who want to get married or start a family one day. I have a high enough credit score I could buy a house when that time comes. I promise it will pay off and save you money by building your credit!!

Xx, Kennah

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