Credit 101 for Twenty Somethings: Over 10 Things You Need to Know to Build a Strong Credit Score!

If you’re in your 20s, you may be starting to think about things like buying a car, renting an apartment, or even applying for a mortgage. But before you can do any of these things, you need to have a good credit score.

So what is a credit score, and how do you build one? A credit score is a numerical representation of your creditworthiness, based on your credit history. It’s used by lenders to determine your risk level and whether you are likely to repay a loan.

Having a good credit score is important because it can make it easier for you to get approved for loans and credit cards, and it can also help you get better interest rates. But if you have a poor credit score, you may have a harder time getting approved for credit and may have to pay higher interest rates.

So what can you do to build a strong credit score in your 20s? Here are over 10 things you should know:

1. Pay your bills on time. This is the single most important factor in your credit score, so make sure to always pay your bills on time.
2. Keep your credit utilization low. Your credit utilization is the amount of credit you are using compared to your total credit limit. It’s a good idea to keep your utilization below 30% to maintain a good credit score.
3. Don’t apply for too much credit at once. Each time you apply for credit, it can have a negative impact on your credit score. Try to limit the number of credit applications you make.
4. Don’t close old credit accounts. Keeping old credit accounts open can actually help your credit score because it shows a longer credit history.
5. Check your credit report regularly. You are entitled to a free credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) once a year. Make sure to check your report for errors and dispute any mistakes.
6. Don’t cosign for someone else. Cosigning for someone else’s loan can be risky because it can affect your credit score if the other person doesn’t pay on time.
7. Don’t max out your credit cards. Maxing out your credit cards can lower your credit score and make it harder to get approved for new credit.
8. Don’t open too many credit accounts at once. Opening too many credit accounts in a short period of time can make it look like you are relying too heavily on credit.
9. Don’t cancel credit cards without a good reason. Canceling credit cards can lower your credit score, so think carefully before you do it.
10. Use your credit cards responsibly. Use your credit cards to make small purchases that you can pay off each month to build a good credit history.
11. Don’t open credit accounts you don’t need. Only open credit accounts that you will use and pay off each month.
12. Don’t let your credit accounts go to collections. If you can’t pay off your credit card balances or loans, it’s better to work out a payment plan or negotiate a settlement rather than letting the account go to collections.
13. Don’t ignore past due accounts. If you have accounts that are past due, it’s important to take action to bring them current as soon as possible.
14. Don’t skip payments. Even if you are struggling to make ends meet, it’s important to make at least the minimum payment on your credit accounts each month.

In conclusion, building a strong credit score in your 20s is important for your financial future. By following these tips and being responsible with your credit, you can establish a solid foundation for your credit history and set yourself up for financial success. Don’t let credit mistakes hold you back – take control of your finances and make the most of your money.