If you’re starting with no credit history, you aren’t alone. In the U.S., nearly 40% of people between the ages of 20 and 24 have little to no credit history to generate a score, according to the Consumer Finance and Protection Bureau. Unfortunately, the same is true for roughly 20% of the population.
Building your credit might seem overwhelming if you haven’t thought about it before, but there are many strategies to employ, even if you’re just beginning. Start by establishing good habits with managing debt, such as not taking on more debt than you can afford, says Brittany Mollica, a certified financial planner based in Chapel Hill, North Carolina. Missing payments will damage your score and can become a burden when you need to borrow money in the future.
“Getting in good habits of always paying your bills is really important,” Mollica says. “You don’t want to have to be climbing out of a hole of all sorts of credit card debt that you’ve piled up, especially starting out early on.”
Credit cards — and alternative cards
Credit cards can be a great tool to establish credit, but they can also damage your score if you take on more debt than you can handle.
If a parent or another trusted person in your life has a high credit limit and a long history of making timely payments, you could become an authorized user on their account and benefit from their good credit. This is one of the easiest ways to lengthen your credit history, says Blaine Thiederman, a certified financial planner in Arvada, Colorado.