Many people become concerned with their credit score when making important decisions later in life, such as buying a home. However, it’s important for people just starting out to be mindful of their scores as well. Building a good score takes time, and by starting early, individuals can help make sure that they are able to obtain a good interest rate when it is finally time to make a large purchase.
If a person has never borrowed money, lenders have little information to go on; they are more likely to lend money to individuals who have a proven record of making on-time payments and handling debt responsibly. For this reason, it is a good idea for people starting out to get a credit card and pay it off in full and on time every month. They can start off with a secured credit card, or one that requires the holder to pay a deposit. Later on, the individual can continue to build their score by switching to an unsecured card, or to one that does not require a deposit and often has a higher borrowing limit.