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Credit savvy: Take your first steps to building credit

Every journey has a starting point, and credit is no exception. How you handle your finances now will affect your credit score in the future, and start you on the path to a robust credit profile. In turn, that will lead to better interest rates on loans and credit cards, according to Julie Bruning, Vice President of Consumer Lending at SAC Federal Credit Union.

Every journey has a starting point, and credit is no exception. How you handle your finances now will affect your credit score in the future, and start you on the path to a robust credit profile. In turn, that will lead to better interest rates on loans and credit cards, according to Julie Bruning, Vice President of Consumer Lending at SAC Federal Credit Union.

“We need good credit for so many things, like financing a home or vehicle, or making other purchases,” she says. “When you get the lowest interest rate available, it saves you money in the long run, and that rate is determined by your credit profile.”

Simple steps to healthy credit

We know why good credit is important, but what can you do to start building your credit? Here are some tips on establishing great credit habits from the start:

  • Get a secured credit card or department store credit card.
  • If you’re having trouble getting that first card, consider a joint account; for example, a young adult might get a joint account with a parent.
  • Refrain from getting multiple credit cards and loans; instead, stick to one or two that you can pay off easily every month.
  • Charge a small amount on the card, like gas or groceries. Credit scores are based on your ability to handle credit responsibly, as opposed to having credit but never using it.
  • Pay the bill on time, and pay in full if possible.
  • After a year of responsible credit management with the card, take out a small loan that you can also repay on schedule.
  • Find a good job and stick with it. In addition to residence history, lenders also look at employment history, and that becomes part of your credit report – erratic salaries and jumps from job to job can put you in a less-than-ideal spot for lenders.
  • Once your credit is moving in a good direction, stay on top of it by checking your score regularly and following good credit habits.

In general, think of credit as a marathon, not a sprint. You may have some stumbles along the way, but as long as you focus on developing good credit habits, you’ll be well on your way to a higher credit score.

The building blocks of credit e-book

Tips for renters and homeowners

Your living situation presents a lot of opportunities to keep your credit on the right track.

  • Make sure your apartment or home is in your name. Part of credit history takes into account the time you’ve lived at a certain address, so establishing residence history is important.
  • If you move, make sure to disconnect all utilities that were in your name. If you don’t, the next tenant may skew your credit history by paying late or skipping payments.

Always make your payments on time – late payments can be especially damaging for people with mortgages.

Author SAC FCU Managing Editor

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