Start Building Credit History at 18
Now that you have turned the age of 18 you are starting to think of building your credit history. Most of you are probably concerned about the most appropriate way to get started since most of the banks are reluctant give credit to young people lacking whatsoever credit history. Most articles advise the taking of a loan from a bank as a starting point for building a credit history. However, a credit is needed most of the time to get a loan.
Authorized User
One of the solutions to this problem that most of the young people face is to ask one of their parents to list them as an authorized user of their credit cards. In this way the young person will benefit from the credit history of his/her relative and use it as a piggyback to build his/her own.
However, this is recommended only in case the parent has a good credit history. Additionally, the willingness of the parent to do this is also needed. Another assumption underlying this advice is that the credit card company will report the non-spousal authorized user. Credit companies are required to list the payment history of spousal authorized users. However, it is up to the company whether it will report the payment history of the other authorized users.
Secured Credit Card
A second solution to this problem is the obtaining of a secured credit card. The latter requires the client to deposit a particular amount of money in the account, which is used as the limit of the credit. It is also collateral of the purchases made with the credit card. However, not all companies that provide this type of credit card report the payment history of the client, so you need to check whether your company will do this.
You should also have in mind that this type of credit cards may have high interest rates and other fees. However, after a specific period of time passes your secured credit card can be transferred into a regular one.
Special Offers for Students
This alternative refers to those of you who are pursuing their studies. There are plenty of offers directed toward students, so research them and find the one that best suits your needs. Such credit cards for students are typically offered to students that are assumed to lack rich credit history. Compare the different products on the market before you sign for a specific one, because you don't want to end up paying too high annual fee or interest rate.
Finally, use the credit card wisely. Many young people lack the needed knowledge of credit cards and tend to misuse them. You should view them as a different method of spending your money, not as an additional source of cash.
| Rate this article : Low | High |
