Congrats on recently graduating college! This is a huge milestone on your journey to adulthood. Now you’re ready to move on to other challenges, such as building good credit.

We’ll help you get started by providing you with some good credit practices, along with tips to avoid common mistakes and pitfalls.

Starting Good Credit Practices

While you might have had some credit built up in college – either good or bad – now is the time to establish a solid foundation for your future. Without a good credit history, most credit agencies will probably be reluctant to lend you money to buy a new car, rent a home or qualify you for different types of credit.

To start building a good credit history you can:

• Apply for a secured credit card. A secured credit card is one you back up with a cash deposit. The amount you put down becomes your credit limit. This will help you build positive credit and a positive payment history. It’s best to use this card for small purchases and to pay the balance in full each month.
• Pay off whatever debt you can. If you are already using credit cards, make sure that you’re minimizing the amount you have on credit and paying off debt whenever possible. Click here to learn about different debt payment methods and see what works best for you.
• Consider store credit cards. Store credit cards have more relaxed approval requirements, which make it easier to obtain this type of card. These usually have high rates though, so it’s crucial to keep a minimal balance or pay off your balance every month.

While these steps will help you establish strong credit, it’s up to you to use credit wisely. Some best practices are to pay your bills on time and keep the amount of credit you use – also known as your credit utilization – low.

How to Keep a Good Credit Score

Mistakes on your path to building credit can cost you big. The price of less than perfect credit is higher interest rates and more difficulty obtaining credit for things like homes, cars, and electronics. Many rental properties even run credit reports before enabling you to rent. Below are some mistakes you want to avoid in your efforts to build better credit practices.

• Pay your bills on time. Not just your credit cards, but other payments too like rent, utilities, cable and mobile phone bills. There are even online services that can help you add rent & utility payments to your credit report!
• Begin repaying your student loans promptly. Then be sure to stay up to date on your payments at all times.
• Skip high-interest credit whenever possible. If you have to take out high interest rate loans in order to establish credit, be sure to transfer balances to a lower rate as soon as you can.
• Check your credit report regularly. Look for errors that may be impacting your credit history negatively. Click here to learn how to get your free annual credit report.
• Keep your credit utilization below 30 percent. Consider this amount more of a maximum limit than a set target. For example, if your credit limit is $1000, you’d want to avoid spending more than $300. The higher your utilization, the bigger impact it could have on your credit score. The amount of credit you use is important. If you use 90% of your available credit and pay off your balance at the end of the month, high usage will still show up on your credit report.

Takeaway

Credit is a powerful tool you can utilize to build a positive payment history and set yourself up for the next big milestones in your life – like getting married, buying a house, etc.

If you’re unsure where to begin on your credit journey or paying off student loans, our partners at GreenPath Financial Wellness are here to help Horizon members, free of charge. Their certified financial counselors will take the time to understand your current situation and will create a personalized plan to help you achieve your financial goals. Click here to get started.

Or if you’re ready to set forth on the path to a strong credit score, now might be the perfect time to get started with one of our credit cards. We offer low rates and simple terms with no hidden fees to make it easier to achieve your financial dreams. Click here to learn more!