I had my first credit card my freshman year in college. It was a Discover card with a $1500 limit on it. It didn't come with instructions, how-to's, or rules of engagement (now wouldn’t that have been helpful🙄). I had just enough to be dangerous. After having this first credit card, I started getting other credit card offers in the mail. Before I hit my senior year, I had a total of a $5000 credit limit. I paid the minimum balance for those four years and realized the enormous amount of interest I had accumulated.
So, let me share with you the 5 rules that I learned from my college credit card experience:
Rule #1
Pay your credit cards in full at the end of each month - not just the minimum balance. Interest won’t incur if there isn’t a balance!
Rule #2
Do not reply to every credit card offer mailed to you. Typically three lines of credit is enough for a lender to judge your credit worthiness. As honorable as it may seem to get all those offers, don’t fall for it!
Rule #3
Instead of opening more than three lines of credit, try to increase the limits on the cards that you already have by calling the credit card company and showing your good payment history, any income increases, and your burgeoning credit score.
Rule #4
If you have a trustworthy family member with good credit, ask if you can be added as an authorized user. Some cards will allow an authorized user to be added at as young as 15 years old. So, technically you can begin building credit as a teenager.
Rule #5
On the road to establishing credit, try not to close any accounts. Remember three accounts is your goal. The older the accounts, theoretically the higher your score since scores are calculated using credit data in your credit report. This data is grouped into five categories as calculated by FICO: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%). If you don't want to use a credit card anymore, simply shred the card and keep it open. Sometimes credit card companies will close an account if it hasn't been used in a while. Check your mail regularly to see if the companies are notifying you of the possible closure.
See, that wasn’t that bad. Learn from my mistakes and take these 5 Rules to start building solid credit.💳
