If you are one of those people still wondering about when the proper time to start building credit is, the short answer is this: the earlier, the better. Ideally, you should at least start thinking about having respectable credit as soon as you start earning money for yourself. If you aren’t too worried about having bad credit in the future, maybe because you would rather cross the bridge when you get there, here are a few reasons to help you reconsider, and avoid the pitfalls of losing your financial freedom.
Is there a right time to start building credit?
While there is no definitive time to start building credit, you may want to think about getting a head start. If you’ve been careful with your finances – which includes not having outstanding loans or unpaid credit card bills – then you can probably get away with starting late on credit building. But it does take a great amount of discipline and maturity to ensure that you are ready to get your finances off to a good start.
Of course, you can’t legally start building credit until you reach the age of 21. But there’s nothing stopping you from planning for it at an early age. Even while you’re still in college, you can start learning about how to properly manage your credit, so than when you reach the legal age you already know what to do. Your age should not be the determining factor on whether you’re ready to start managing your credit or not. Even if you are of proper age, if you have the discipline and the maturity of a 12-year old, then you’d soon be in a heap of trouble. Whether you’re young, or young at heart, the right time to start building credit is now!
So how do I start building credit?
Until you reach legal age, the best that you can do in order to prepare yourself for the task of building and maintaining good credit is to manage your allowance. Open a bank account and keep your money safe from the occasional, on-a-whim temptation. Alternatively, you can ask your parents to open a bank account for you if you are under the age of 18. By the time you hit 21 you would have saved quite a decent amount of money for yourself.
You might be confused about what saving money has to do with building credit, when you know that credit is all about your ability to borrow money. If you have enough savings, or if you earn more than enough for your lifestyle, then there won’t be a need for you to borrow money in the first place. Also, having a savings account puts you in a good position for just about any financial endeavor you decide to undertake. The fact that you were able to put up a sizeable savings shows how well-equipped you are at managing finances.
Another option that you might want to think about is opening a student debit card account. It might not be a real credit card, but you will be familiarizing yourself with the idea of buying without cash, and the risks that come with it. This can help you get used to the convenience and learn how to limit yourself when it comes to spending. Getting used to having a debit card and knowing how to use it with discipline is a great way to prepare yourself for when the time comes that you eventually have your very own credit card.
