I've been adulting all day so this is my way of venting it out. Today, I paid off my credit card and opened up another savings account so I'm feeling like money right now and I feel like talking that talk. Credit is one of those things that you learn as you go. You always hear about it but no one really teaches you about it until you get it [just like taxes, banking, loans, etc. but that convo is for another day].
Personally, I call credit "my trust level". Basically, credit just shows how responsible you are with keeping up with payments. Credit is also one of those things that's like a job, nobody will hire you without experience. I realized Summer 2016 that I should start building credit. At the time, I was working at Macy's and they have a store card so I figured I could open an account with them since I'm employed there. That was a dub and I got denied. Then, I applied for a Victoria's Secret card [honestly, just so I can buy sweats and build credit at the same time] and they denied me too. At this point I'm thinking like nobody is going to let me borrow money until I'm $30,000 in student loan debt then FINALLY, Amazon approved me for a credit line. On my Amazon card, I made sure that I did not go over 30%. This is the number one piece of advice people will give a college student on credit. Now what do they mean by not going over 30%?
For example: My first credit limit was $700, meaning I was not allowed to have a balance over $700. So what they mean by not going over 30% is not having a balance over 30% of your limit. In my case my 30% was $210.
I actually just came from opening up another savings account and the representative saw I was young, so she asked about how my credit was looking so we got to talking and she actually told me store credit cards are the best ways to start building your credit. She also told me that having multiple lines open at a time [no more than 4] and making those payments on time looks even better than just having one. Banks just want to know how responsible you are with your money before they give it to you. Credit is the easiest way of showing that.
One easy way of building credit that most experts recommend is to use your first Visa/Mastercard/ etc. credit line for gas and just pay it off every month
Another myth is that only your credit score matters. Your credit report is equally important, if not more, as your score. Your score is a basic number on a scale showing how responsible you are, your report on the other hand is showing EVERYTHING. Think of it like your GPA. Your cumulative GPA is usually on a 4.0 scale so it goes from 0.1-4.0. With your credit score, it goes from 300-850. Your report is like your transcript that shows that one bad semester. One thing I learned from my fave podcast [S/O to Platanos and Collard Greens], is how it's actually your credit report that most people look at before either approving you for a loan or even getting certain jobs. Just like you want to stay in that 3.0+ range for school, you want to stay in that 650+ range with your credit. Once it's down, it can take months or more likely years to build it back up again.
Mini Story Time: Freshman year, one of my professors gave the class this speech about credit and she told her story about how she applied for a college credit card and had a $3,000 limit. She spent it ALL and she made late payments. She told the class that she is just now starting to get her credit back together from that [she has a child in middle school right now so I would say she's in her late 30's/early 40's]. This was in COLLEGE and that one mistake she made followed her into her adult life. Everybody makes mistakes but these are some you can avoid.
Credit is not something to be scared of, you just need to make sure you're responsible with it. Credit is actually lit because when I was waiting on my paycheck, I was ordering groceries on Amazon with it. Lil bih gotta eat. Establishing credit now is easier than doing it down the line when you're trying to buy your first house or lease a car in your name. Don't wait, be prepared