Start Young: Build Your Credit

Start young and build your credit. If you are under 30 years old, you’ve likely heard several adults discuss the importance of building credit along with tips on how to keep your scores high. This article will discuss how to get started and build your credit the correct way.

Follow the steps below to build your credit for the first time (or repair it!).

If you are asking yourself: “I’m young; how do I get a car loan, lease an apartment, or get a mortgage?” You’re in the right place. Now is the best time to start planning your financial future and preparing your credit accordingly. If you are young-at-heart and require to hit the “restart button” this article is perfect for you, too.

Whether you’re just getting started or beginning again, you need a solid understanding of what credit is and isn’t and how it will affect your bank balance.

Credit is a term used by financial institutions to identify money used by a borrower that is provided by a third-party. So a bank that lends you money to purchase a new car, home or a gift is considered a third-party loan. Credit in general isn’t good or bad. It is simply a form of payment you can choose to use at your discretion.

Credit comes with lending terms. These terms are established by the lender and agreed upon by the borrower before the funds can be used. If the person does not agree to the conditions, the contract is terminated and the person finds another funding method.


Without a credit history, lenders look for the following:


  • Open a card
  • Ask for a co-signer
  • A starter credit card
  • A credit-builder loan
  • Student loans
  • A sizable deposit


Once you turn 18, ask your parents to sign off on an ‘emergency only’ credit card. At Better Credit we advise you to hold off on making purchases with this card. The purpose is for it to build your credit history and not as a source of income.

Get a cosigner with good credit

Is there a parent or guardian with good credit able to co-sign on a loan? If so, this is one of the fastest ways to receive financing for your purchase. This will give you time to build your credit as you make payments on the home or car. Another route would be to ask the co-signer for a private loan. She or he might be able to give you the money directly and charge you interest throughout the term of the loan.

If you choose this method, be sure you both trust each other. They may require you to sign an agreement with payment terms, which is a standard practice.

Get a starter credit card

A starter or beginner credit card will allow you to establish your credit. These can be called secured cards and start you off with a low limit ($300-$500). Here are a few items to look for:


  • An annual fee
  • Higher interest rates
  • Limited or no rewards


In order to qualify for a secured line of credit you must keep a predetermined amount of money in your bank account. If your balance goes below the amount, you may be reprimanded. Therefore, in order to spend $500 on your card, $500 needs to be in the bank account to cover the purchase. Similar to a traditional credit card, you make monthly payments and each purchase you make is deducted from the balance.

The goal of starter cards is to allow you to build your credit. In order to accomplish this each month your balance is reported to the credit bureaus.

If you are a college student, these cards will “grow” with you. After you graduate and start your career, your credit limit will increase based on your previous performance. As long as you remain compliment to the lending terms, your lending company will gladly reward you with a higher spending limit.

The bottom line is that it’s up to you to stay current on all of the interest rates and any of their annual fees. Should you need to repair your credit, contact our Better Credit experts today.