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Fall 2012 - Tips for Young Adults

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Build a Good Credit Record: It's Important for Loan and Job Applications

As you become responsible for paying your own debts — for credit card purchases, rent, car or student loans, and other obligations — you are building a credit history. In general, the better your credit history and the resulting credit score (a number summarizing your credit record prepared by companies called credit bureaus), the better your chances of getting a loan with a good interest rate. A strong credit score also can help when you apply for a job, an insurance policy or an apartment. How can you build and maintain a good credit history?

Pay your loans, bills and other debts on time. This will show you are responsible with your finances.

If you have a credit card, try to charge only what you can afford to pay off immediately or very soon. If you can’t pay your credit card bill in full, try to pay more than the minimum balance due so that you can minimize the interest payments. Also be aware that your credit score will likely fall if you owe a significant amount on your credit card compared to the card’s credit limit. Applying for multiple cards also can lower your credit score (see Credit Cards: How to Avoid Costly Mistakes).

Review your credit reports for errors. Correcting wrong information in your credit history may improve your credit report and score. To obtain a free copy of your credit report from each of the three major credit bureaus, visit www.annualcreditreport.com or call toll-free 1-877-322-8228.

If you are unable to resolve a dispute with a credit bureau over wrong information in your file, you can submit a complaint online at www.consumerfinance.gov/complaint.