Are you a parent with kids in high school or college, or are you a young adult or teen studying in college? If so, you may be wondering when is the best time for one to start building a credit history.
In the U.S., having a credit history is essential, but most people are not even aware of it.
Without a credit history, you won't have any credit score, you can't get regular credit cards, may be turned down for a job, may be rejected for mortgage, auto or business loans, or not being able to rent a place to stay!
John Olson, Financial Consultant at LPL Financial, told GET.com that in these economic times especially, you should build credit as young as you can. He said, "The world runs on credit and so do most people. Used wisely, it can even work to your advantage."
Mike Kelly, a military helicopter pilot and author of Financial Advice for the New High School Graduate said, "As soon as you hit 18, you can get started, and if you have a credit building plan, you can be well on your way to having credit when you need it (Because if you need it and you haven't built it, you won't have it when you want it!). Credit is one of those things that are like good grades in school. If you knew you needed them to get into a great college, you would have earned them when you had the chance."
Start Building Credit While In High School Or College
Howard M. Rosen, a Certified Public Accountant and President of Conner Ash, told GET.com that he thinks that children in high school or college should start establishing credit.
Howard said, "This can be done by having the child borrow $500 on a 90-day note (with a parent co-signing of course) and promptly repaying or by opening a credit card with a small credit ceiling and having the child pay the bills timely."
Greg McFarlane, an advertising copywriter and author of "Control Your Cash: Making Money Make Sense", also recommends that the sooner you build a credit history, the better.
Greg told GET.com that as a college or high school kid, one main way to get some accounts on your credit history is to get a credit card or two. He said, "At the very least, a power bill or a phone bill can get you started. If you have roommates, go contrarian and offer to put the accounts in your name."
Some parents out there may not think that getting a credit card in college is a good idea; they may think their kids are not ready for it, and will overspend their money and possibly get into debt. But that's the thing about money: one has to learn responsibility in order to grow into a responsible adult when it comes to money. You have to put it into practice and let it become a habit.
I think that college is a good time for teens or young adults to get a credit card since it will teach them how to be diligent with their money, how to use a credit card and most importantly, it will also help them build up a credit score, so by the time they finish college, they will have credit history to show for, and be able to replace their student credit cards with better cards such as rewards credit cards.
Mike Kelly added, "GET.com has numerous options to get credit cards. First you have to realize that you need credit. You need good credit to rent a house, buy a car, get a credit card and sometimes even to get a job!"
The Sooner You Start, The Better Off You Are
Bradley Smith, Branch Manager of Rescue One Financial, told GET.com that the best time to start building a credit history is as soon as possible.
"I have personally reviewed over 10,000 credit reports and the individuals with the highest credit scores typically have the longest credit history," Bradley said.
Step To Take
If you have kids who are below 21 years old, apply student credit cards for them and be their co-signer. Let them practice with paying small monthly expenses with it such as phone bills or utility bills, this way, their credit score will rise steadily over time, so by the time they finish college, they will be able to enjoy all the benefits of having a good credit history and be ready to take on the world.
Best Credit Cards for Building Credit
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OpenSky® Secured Visa® Credit Card
No credit check
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