Building Credit 101
As a teenager, your accomplishments often set the stage for your life after school. But achieving your life goals doesn’t just mean performing well in school or being involved in extra-curricular activities. Financial responsibility and building credit are just as important to your success.
To future employers, landlords, service providers, and lenders, your credit score is an indicator of your ability to borrow money or purchase certain goods and services. Represented in numerical form (0-900), credit scores are based on key information found in your credit report, which is compiled by credit reporting agencies using data from financial institutions, like BHFCU. The following are a few things to take into consideration as you work to build your credit score.
#1 - Achieving a healthy score requires that you have credit (i.e. accounts, credit cards, loans.) While this isn’t always an option for teenagers, there are some great things you and you parents can consider to help you get started.
- Setting up your own savings and checking accounts
- Becoming an authorized user on your parents’ credit card
- Opening a secured $500 credit card to get you started
- Transfer your cell phone into your own name
#2 - Building credit is a marathon, not a sprint. You aren’t going to earn a good credit score overnight. It takes time and a history of responsible financial management. Spoiler alert: that means not over drafting on your account and making bill payments on time.
#3 - Monitor your progress regularly by using BHFCU’s free credit monitoring tool in Online Banking. This service allows you to easily view your credit score and receive helpful suggestions on improvements you can make.
