According to recent data, young Americans between the ages of 18 and 29 years owe an astounding $1.05 trillion in debt!
While the debt they owe is relatively lower when compared to other age brackets, it’s still quite alarming. Most of this debt can be attributed to student loans, credit card debt, and auto loans. Most Americans rack up quite a credit history before they even reach their mid-twenties. This can have severe negative consequences on their long-term financial goals.
Having a strong credit history is the cornerstone of ensuring high spending power and financial freedom in the future. But building credit can be tough for young adults who have little to no credit history in their name.
Most young people find it challenging to get approved for loans, credit cards, or mortgages when they have no credit history to present to financial institutions.
Here are three simple steps that will help you shape and maintain a solid credit history if you’re a young adult:
Don’t Shy Away from Student Loans
Many young adults shy away from going to college because they’re afraid of graduating with a mountain of debt. However, accepting student loans can be quite helpful in the long run.
Student loans are usually a one-time affair and need to be paid back over a specified period. The moment you accept the loan, your credit is established. The repayment of the loan can be a long process, but with easy installment plans, it’s not that difficult.
Look into Secure Credit Cards
The second step is to apply for credit cards with low-interest rates. Luckily, many credit cards have a low spending limit, which will help you rein in expenditures as you build credit.
A low credit card limit will also you to balance your earnings against how much you are spending. However, you should also make sure you’re paying off more than the minimum required amount each month to establish good credit history.
Get a Co-Signer
Getting a parent or a guardian with stellar credit to co-sign your credit card or any loans you need will help you get a lower interest rate on them.
However, you still need to make sure you keep up with the payments, or else, your co-signer will be held responsible!
Repairing damaged Credit scores
While healthy financial habits can ensure a good credit score, sometimes, your credit score can begin to fall without any activity on your part. If you notice any strange increase or decrease in your credit score, hire a reliable credit repair company immediately!
The credit experts at Oak Credit Repair can assist you with credit repair. As a leading Michigan-based credit repair specialist, we also offer free consultations to clients all over the United States.