Summary:
It is never too early to start thinking about your credit future. Even young teens can start learning about responsible earning from their parents and can hopefully go on to apply these lessons to their credit. Parents can help their teens build their credit scores by allowing them to get credit cards in their own names, and can help them build their financial responsibility by requiring them to hold down a job as well.

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One of the first things that you need to know about your credit score is that no credit is just as bad as bad credit. You might think that by avoiding credit scores and loans like the plague, you are doing a good thing, and to some extent that is true. It is not healthy to build up huge amounts of debt if you cannot handle it (or even if you feel like you can handle it), however a little bit of activity in your credit history can make a word of difference.

If you are in college, then federal student loans can be a great way to build your credit score since you don’t need to have great credit to qualify. Borrow as little as possible if you are borrowing just to boost your score, and make regular payments to keep the interest from increasing. You should hold a balance or at least keep the account open for at least a year to have the maximum positive effect on your credit. Even if you pay it off completely, do not close the account before the year is up.

Judicious use of credit cards can also help to get your credit rating started, and you are likely swimming in pre-approval offers from all over the place. Your only concern should be to use credit cards wisely. Once you have a card, limit your spending on it, and keep the card at a zero balance by paying it off every month, regardless of the great introductory rate that you might have gotten. The longer you have your account, and the longer that that account gets paid regularly, the better it will look to creditors.

Your goal on your credit report is to have a good balance of debt to credit. The more credit you are allowed and the less of it that is used, the better off you are. Be careful, though, as applying for multiple cards can cause your score to drop drastically, and too many new accounts look fishy to those who are considering extending credit to you. Focus instead on two or three cards with good rates and limits, and keep the balances on these cards at zero to keep from getting into trouble with credit card debt.

If you are reading this because you already have a slight problem with debt or because you are looking toward the future and seeing a potential problem, then we can still help you. One of the biggest sources of trouble for people in their twenties are student loans, which can get out of control quickly. Coupled with the use of credit cards – and often the overuse of credit cards – students can be looking at a crippling debt that will hit them just a few months after their graduation.

The first piece of advice that we can offer is to get yourself a job as soon as possible if you do not have one already. This might not seem like credit advice, exactly, but in addition to making an income other than loan income, you will also be providing future employers with a job history that shows that you can handle stressful situations (like working while going to school). It will also show that you are responsible and good at managing your time. The income from this job should be put toward getting your debt down, or at least toward keeping it from growing.

If your student loans are not subsidized, then you need to immediately consider the interest that you are accruing every single day. This interest is a big part of how student loans get out of control, so it pays to pay attention to it. You should be paying of as much of the interest as possible, and using another part of your income from your job to help you pay for the necessary expenses of living like food and toiletries. Think of it this way: you can live on macaroni and cheese now, or you can live on it into your thirties as you struggle to pay down your debt.

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