When should you start building your credit score? Top tips for everyone

Having a good credit rating is essential for everyone today. It plays an important role in various aspects of your financial life, including getting a credit card with bonuses, getting the lowest interest rates on a personal loan, and even getting the job of your dreams.

Your credit score can influence many life decisions related to personal finance, so it’s essential to start building it as soon as possible. You may be new to this concept because few young people have learned about financial literacy in schools. Keep reading to learn more about the importance of building your credit at an early age.

When should you start building a credit history

Many young people are unaware of when they should start building their credit. They believe that they will have enough time for this after graduating and starting their career. However, the reality may be different. Once you graduate, you’ll need to already have an established credit history if you want to land a decent job, get an unsecured credit card, or a personal loan.

More than 40% of students do not have enough knowledge about their credit history and its importance because they have not been informed about it at all. Many teachers and parents do not consider this topic important, while around 25% of young people do not even know how to check their grade. you should learn what is a bad credit score and how it can affect your credit history and other financial decisions before it’s too late. It’s good to start building your credit when you’re 18 or even earlier.

Why You Should Establish Credit Earlier

So, is it really important to build a credit history from an early age? Yes, you need to think about your financial future in advance. While you’re still young, you have plenty of time to build strong credit and even make mistakes. You understood correctly, many people make mistakes that lead to unpleasant consequences and the loss of several points in their credit rating.

You may miss some payments or be late with them from time to time. If your credit rating drops a little, you will have to wait about seven years before it returns to normal. So the sooner you start building it, the better it will be for you in the long run.

More than that, your credit history can affect your borrowing abilities. If you decide to get an unsecured loan solution, you will definitely need to provide proof of your creditworthiness. This is your credit history. Lenders will carry out a credit check to determine whether you are at risk or not. Credit card issuers also review the credit history of the customer before issuing a secured or unsecured credit card.

If you want to get an unsecured credit card and claim additional bonuses, you will need to have decent credit. Borrowers with good or excellent credit can benefit from lower interest rates on mortgages and even student loans. Additionally, many employers review an application’s credit for potential red flags such as overdue accounts or outstanding payments. So your credit can even affect your ability to land your dream job.

Benefits of mortgage

Despite the current pandemic and more than 18 months of economic recession, American consumer credit ratings continue to rise. According to the recent Experian Reportthe average VantageScore in 2021 was 695 compared to 688 in 2020.

Having a good credit score has many advantages. Having a high score and a good credit history is beneficial for many aspects of your life. Here are some of the main benefits:

Higher approval rates

If you decide to apply for a borrowing solution like a loan or a credit card, you’ll have a better chance of being approved with good credit. Lenders and traditional banking institutions are eager to deal with low-risk customers with above-average FICO scores. So, if your current score is 550, you will be less likely to be approved than someone with a 750 score. Therefore, your credit score along with your employment status and monthly income are among the main factors considered by lenders.

Lower interest rate

Another advantage of building up your credit at an early age is that you will be able to benefit from lower rates. Even if you are still studying at a college or university, there will come a time when you decide whether to go for a personal loan, car loan, or mortgage. If you have already established credit, you will be a more favorable candidate and lenders will approve your application with the lowest rates.

More flexible conditions

A good track record and a good credit rating allow consumers to qualify for more flexible loan terms and the best terms on different borrowing services. Again, when a lender sees you as a low risk customer due to good credit, they will be eager to give you a higher credit limit on your credit card or issue a larger sum on a personal loan. Additionally, consumers with good credit can take advantage of longer and more flexible repayment periods.

Robust Benefits

This is what so many consumers yearn for. We all want to get a credit card with added bonuses like high rewards rates, annual travel and dining credits, lounge access, and more. You can only get these perks with a good rating. You can find some credit card benefits and rewards even for customers with fair credit, but having a great credit history will open even more doors and opportunities for you.


Feel free to start building your credit history while you’re still young. There are many benefits to having an established credit score when you graduate and start a career. Start by taking out a secured personal loan or a secured credit card. Making regular payments on time will help you build decent credit in the short term.

Establishing good credit is important if you want to achieve your financial goals and avoid mistakes. This way, you can avoid risky lending solutions and borrow money responsibly. Make sure you manage your credit well and pay your bills on time.

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