How to Build Credit at 18 Years of Age

While there is a lot of hyperventilating in the mainstream media about debts and bankruptcies and foreclosures, establishing and maintaining credit is not that big a deal if you follow a few basic rules. This is especially true for young adults starting off with a clean slate because, with the right strategy, it is possible to create a real credit record and have a reasonably high credit score within less than a year.

Instructions

1

Establish both a checking and a savings account at a bank or credit union if you have not already. While this is a minor factor in the actual calculation of your credit score, it is looked on favorably, and having a banking relationship can lead to other good credit-building opportunities.

2

Apply for a credit card or take out a loan. Many credit card companies will give 18-year-olds -- especially just-enrolled college students -- a small limit ($250 to $1,000) credit card even without a credit record to give them a chance to build credit. If you are having problems getting an unsecured credit card, consider a personal loan or an auto loan. Some car dealers (especially used car dealers) will approve a loan application with little to no credit record if you have a job or can verify regular income.

3

Get a secured credit card. If you are a full-time student and can't work or can't get an unsecured loan for whatever reason, consider getting a secured credit card. A secured credit card is where you make a deposit with the credit card company and can charge up to that amount. If you charge items and pay every month, this does help to build your credit, but not as fast as with unsecured loans.

4

Make sure that you pay all your current bills on time. Whether it is just your new credit card or all of your bills (utilities, cable, phone, etc.), if you live on your own, it is very important to always pay all of your bills on time as that is the number one factor in determining your credit score.

5

Maintain a stable employment history and housing situation. Keeping the same job for several years does help and, while owning and living in your home on a long-term basis is ideal, just living in the same apartment or condo for more than two years is also a plus.