By M Katie Helle, CPA

As we have learned, your credit is what banks and lenders look at to decide whether to lend you money.  With a general understanding of credit scores and the factors used to calculate your score, you may be wondering is how you can manage your credit.  Managing your credit can be done in a few simple steps:

  1. Choosing the right credit card – shortly after turning the age of 18, you will likely start to receive multiple credit card offers. Just because you receive these offers does not mean you need to apply for all of them.  Look through the offers you have received and choose the best credit card option for your circumstances.  You should look for a credit card with a low interest rate and no annual fee.
  2. Paying credit card balances in full and on time monthly – once you receive your credit card in the mail, you will want to use it to build up your credit score, but only charge what you can payoff in full monthly. This is where young adults get into trouble; they have a new credit card and immediately start purchasing things they cannot afford.  To avoid this, only charge what you know you can pay off each month perhaps starting with your gas or groceries.  Also be sure to review your monthly statement for accuracy.
  3. Monitoring your credit history – this is essential to ensure your credit history and score is accurate. With credit fraud at an all time high, reviewing your credit annually will help to combat any inaccuracies.  Each of the three credit bureaus are required to provide you with a free copy of your credit report annually.  You can get your free credit report here.

Managing your credit is an ongoing commitment.  Building credit when you are young using the steps above will get you all that much closer to getting an approval for a much larger loan later in life such as a car or even your first home.