A recent report showed that younger adults between the ages of 19 to 29 were found to have a credit score near 627. That’s approximately 50 percent lower than the average. It’s also the lowest rating in all of the other age groups. The following tips will help you boost your credit score and prepare you for obtaining your own loans in the future.
Apply for a Credit Card
If you are a millennial, you may be looking to avoid debt by opting out of credit cards. Unfortunately, in order to obtain a good score, you need to have some sort of credit history. If you’re looking to apply for a credit card, you want to shop around. Credit card companies such as Credit One, offer competitive fees and rates. They also offer incentive programs, so you can get rewarded every time that you use your card.
Just as you would shop around for a loan for a car or home, you want to do the same with a credit card. When you’ve compiled all of the information from the various credit card companies, you’ll be better equipped to decide who has the best rates, lowest penalty fees, and best rewards.
Pay Your Bills in a Timely Manner
Whether you’re purchasing your first property or paying your utility bills, you want to pay your bills on time. Your payment history is an integral part of your credit score. Making just one late payment can be enough to tarnish your history, so you want to be prompt. Online banking has made it easier for consumers to pay their bills more timely. As they come in, you can schedule them for payment well in advance of their due date.
Budget Wisely
Millennials have better opportunities when it comes to building up their credit history. You can get a handle on your expenses by setting a budget. This means coming up with a plan that outlines all of your expenses such as a car payment, rent, meals, insurance, and savings. If you have additional money, this should be put in an account in case an emergency arises in the future. To avoid becoming sidetracked from your budget, you never want to spend more than you make. A good budgeter also knows when to cut back on indulgences such as dinners out and the daily coffee runs. Until you’ve had a chance to save some money and boost your credit score, it may be in your best interest to live at home. You can probably negotiate a better deal on rent and utilities for your room at home with your parents than with a landlord in the suburbs or city.
Refrain From Overcharging
If you can’t pay for an expensive pair of shoes or a vacation to Florida, charging it on your credit card isn’t going to help your credit score. After you’ve secured your credit card, you want to pay it off on time each month. While you can earn bonuses for food, clothing, utilities, and gas when you charge the items, you still need to be able to come up with the money when the bill is due. Incurring credit card debt can put you behind because of the interest you’ll be accruing. If you are unable to fund the bill, you may also have to pay late fees and penalties.
Monitor Your Score
Monitoring websites can help you keep track of your credit score without having to pay for this credit monitoring service. You should take a look at your score every three to four months. If you’re planning to secure a loan for a home or automobile, you may also want to assess your score well in advance. This gives you time to correct any errors such as late charges that never occurred and debt belonging to another person or family member.
Keep Current With Student Loan Debt
College can provide millennials with a number of career opportunities. Unfortunately, this debt can take a number of years to pay off. While you may have your education under your belt, it doesn’t mean that you can ditch the loans that you’ve racked up while going to school. In addition to your other expenses, you want to keep current with your student loans.