How to Build Credit as a Younger Millennial/Gen Z

As a younger millennial or Gen Z, you may be wondering how to build credit.

You may be concerned that you don't have enough experience or credit history to get started. But there are still plenty of ways to establish good credit and start building a solid credit history.

Here are some smart strategies to help you get started:

1. Get a credit card and use it responsibly.
2. Make on-time payments for all your bills, including rent and utilities.
3. Keep your debt levels low and try to pay off your balance every month.
4. Apply for a car loan or a mortgage and make on-time payments.
5. Monitor your credit score and credit reports regularly and look for errors or fraudulent activity.

Check Your Credit Report and Credit Score

You should start by checking your credit report and credit score. This will give you a good idea of where you stand and what you need to do to improve your credit rating.

You can get a free credit report from annualcreditreport.com.

Find Out What Is Holding You Back

You may be unaware of the factors that are impacting your credit score.

Your credit score is a reflection of your credit history. It is determined by a number of factors, including your payment history, the amount of debt you have, and the type of credit you have.

If you are having trouble building credit, it is important to find out what is holding you back. There may be some things you can change to improve your credit score.

For example, you can start by paying your bills on time and reducing your debt load. You can also beef up your credit history by applying for a secured credit card or by taking out a small loan and paying it back on time.

Create a Budget and Make a Plan

Now that you understand the importance of credit, it's time to create a budget and make a plan. The first step is to figure out how much money you can afford to spend each month. This includes rent, utilities, food, transportation, and any other expenses you may have.

Once you have a budget in place, you need to make a plan for how you will use your credit cards. Don't be afraid to start small. If you have never had a credit card before, start by applying for one that has a low limit. Use it to make small purchases and then pay off the balance each month.

As you build up your credit score, you can apply for more prestigious cards with higher limits. Just be sure to always pay your bills on time and stay within your budget.

Be an Authorized User

If you're a younger Millennial/Gen Z, building credit can seem like a daunting task. But it's not impossible. One of the smartest strategies is to be an authorized user on someone else's credit card.

Being an authorized user will help you build a credit history, and the person you're linked to will likely be responsible for their finances, which will help your credit score. Just make sure you never miss a payment, and keep your spending under control, or you could damage your credit rating.

Now that you understand the basics of credit, it's time to put those tips into action and start building your credit history. Here are some smart strategies to help you get started:

1. Use your credit card regularly and pay your bill on time each month.
2. Keep your credit utilization low or no more than 30% of your total credit line.
3. Monitor your credit score and credit reports regularly.
4. Avoid accruing too much debt.
5. Ask for a raise or get a side hustle to improve your income potential.