Sooner than you may realize, your credit score will start to matter.
A solid credit score can be the difference between qualifying for an apartment or a low-interest car loan or missing out. So to have credit ready when you need it, the time to start building a good and lengthy credit history is now.
There's more than one way to build credit, and it could be as simple as reporting your ongoing bill payments to the major credit bureaus. But keep in mind: Building credit takes diligence, particularly since missing payments can hurt your score for years to come.
Your credit score is a number that typically ranges between 300 and 850 and is calculated based on how reliably you've paid past debts, such as credit card bills. Lenders use your credit score to predict how likely you are to repay debt and to decide how much interest to charge you.
Credit cards can be a great tool to establish credit, but they can also damage your score if you take on more debt than you can handle.
If a parent or another trusted person in your life has a high credit limit and a long history of making timely payments, you could become an authorized user on their account and benefit from their good credit. This is one of the easiest ways to lengthen your credit history, says Blaine Thiederman, a certified financial planner in Arvada, Colo.
If you have your own income, you can apply for a credit card when you're 18 years old; otherwise, you have to wait until you are 21.
A secured credit card is typically the best credit card to start with. A cash deposit backs these cards, and since the credit card company can take that deposit if you miss payments, people with short or poor credit histories can qualify.
