4 Easy Tips on How to Build Your Credit as a Millennial

You’ve gone to college, done your internships and built your résumé—now it’s time to build your credit. Whether you’re looking to apply for an auto loan, a mortgage or trying to get approved to rent an apartment, you won’t be very successful without good credit. Building you credit and understanding how it all works can be a little overwhelming. Here are four basics to help you get started from the credit experts at Suffolk Federal, a leading Long Island credit union.

  1. Start small. The only way to build credit is to start using a credit card. But with no credit history, it can be hard to get approved. Shop around for a secured credit card that has a low APR and no fees. Secured credit cards use your savings account as collateral, making it easier to get approved. Just know that you’ll most likely start off with a low credit limit—but you have to start somewhere! Make small purchases, pay them off every month and watch your credit grow.
  2. Know your number. Credit scores range between 300 and 850 and unlike golf, you want your score to be higher rather than lower. A score that is 620 or below is considered a bad score, 620-659 is poor, 660-719 is average and 720 or higher is an excellent credit score. The better you score, the easier it is to get approved for a loan and the lower your interest rate—and your monthly payments—will be.
  3. Learn the lingo. You may know what a selfie and #tbt mean, but knowing financial terms is extremely helpful. Here are three you should know:
    • APR (Annual Percentage Rate) (aka interest rates/charges): The annual percentage rate of interest you’ll be charged on all or a portion of the balance on your credit card if the full amount isn’t paid on or before the due date.
    • Interest charges: A fee that credit companies charge you (the borrower) for allowing you to carry a credit balance on your card. Interest charges can be avoided if you pay your full credit card balance off each month.
    • Credit utilization ratio: Takes into account the balances on your credit cards and the credit limits on all of your open credit card accounts; usually expressed as a percentage.
  4. Be on time. You may have been the kid in college who was always late to class, but paying your monthly credit card bill on time (or actually any bill for that matter) is crucial. Late payments will have a negative impact on your credit score and you may be flagged as a credit risk, making it harder in to get approved for future purchases. You don’t have to pay your balance off in full, just make certain you’re paying off at least the minimum balance each month.

Ready to start building your credit? Apply for a secured credit card from Suffolk Federal today.

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