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Last week I touched on why it's important for young adults to learn about credit, the meaning of a credit score and why good credit is vital. This week let's look at establishing credit early and how PCU can help.
How can I start to establish credit early?
Some financial institutions such as PCU have come out with “Credit Builder Loans.” These loans allow you to take out a small loan such as $500.00 or a larger loan up to $2,500.00. What happens is the loaned money is placed on a hold in your saving account. As you make monthly payments on the loan, you start to pay it off. As soon as the loan is paid the money that was put on hold is now yours to spend! Other ways to build credit is to get a credit card and manage it well. Only use it for small purchases and make sure you make payments on time. Also shop around for a card that has reasonable interest rates. This will ensure a good credit score and create good habits for spending credit in the future.
The most important thing is to be responsible with your funds and be punctual on payments. This will be helpful for the rest of your life and starting early is a bonus because you have an advantage over teens that are not doing anything!