Tips for Establishing and Improving Your Credit

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Financial literacy month is celebrated during April and serves as a great opportunity to reflect on your individual financial health and goals. 

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Woman using a calculator and reviewing financial documents

Overall knowledge of the credit process and how to establish credit is essential to a solid financial future. During a recent Financial Information, Resources, Services, and Tools (FIRST) webinar, a credit expert from Experian shared tips on monitoring, maintaining, and improving your credit.

Tip #1: Start Small to Build Credit History

Securing a first line of credit can be more difficult than you think without any credit history. A bank, credit union, or department store you already have a relationship with can serve as a good first resource for extending a small credit line to build from. Secured credit cards, or cards that require a cash deposit that is then used to establish a credit line for purchases, can be another tool for those looking to build credit.

Tip #2: Seek an Authorized User Status or Qualified Co-Signer

You may have a parent or guardian who already has an established line of credit. Consider obtaining an “authorized user” status on an existing account to help build credit history. A parent, guardian, or other individual who has established credit can also serve as a qualified co-signer. A co-signer assumes in the risk-sharing of the line of credit in case of missed payments or default and should always be considered carefully.

Tip #3: Utilize Your Card, But Pay Off the Monthly Balance in Full

Once you have established a line of credit, don’t be afraid to use it within reason! Making manageable purchases that you can pay off in full each month will help you to develop good credit standing and improve your credit score over time. Adhering to the established payment schedule and not carrying a balance month to month will keep you from accruing late fees and penalties as well as interest on payments.

Tip#4: Monitor Your Credit Score and Check for Inaccuracies

Your credit score can help determine the loan terms and rates that you qualify for on major purchases and can give an indication of your financial reliability for not only lenders, but also landlords and employers. It is important to know your credit score and check for inaccuracies. You can access your credit scores annually, for free, from all three credit reporting agencies. 

To learn more, view the full webinar recording with Veronica Herrera, director of Core Credit Services, at Experian.

More on Credit Fundamentals

Interested in additional information about the basics of establishing credit? Learn why credit scores matter, what they mean, and get more tips on building credit from scratch in this AAMC Financial Wellness Program article “How to Get Started With Credit.”

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