Are you eagerly waiting to be 21 so that you can be of legal drinking age? Well, who hasn’t? That’s also the age when you become eligible for opening a credit card account without a co-signer. So, here are the 5 must known credit facts:

1. The credit reporting industry is keeping an eye on you already

Yes, we know it’s a little creepy to imagine, but what can you do!

So have you ever forgotten about a signed lease for an apartment or a paid smartphone service? According to the industry experts, every type of unpaid financial responsibility can end up on your credit report, making its home as a negative mark for at least 7 years.

Even you don’t have any intention of using credit cards, you are going to need a positive credit history soon for purchasing a house or applying for an auto loan, so you should know that landlords and loan providers might check your credit report to make informed decisions about whether to go for you or not.

2. You should keep a regular check on your credit report

It’s just like standing in front of a mirror whenever you are preparing for an interview!

Always keep in-check your credit report when applying for apartments, jobs, credit cards or loans. You can do this online.

Credit cards, student loans, unpaid bills, late payments, or debts could become the cause of a turned down application. Make sure that your personal information, public records, debts are listed in a correct manner, and supervise your credit report and score each month.

Remember, if you don’t have any credit file under your name, then it’s always easier to build a good credit from no credit.

Credit Facts

Single Credit Usage

3.  Always use a single credit card at first

Start slow!

Once earning, a credit card makes much more sense as it offers fraud protection while helping to establish good credit. Also, with the help of a secured card or being an authorized user on someone else’s account can surely help to create good credit when you charge minimum, consistent purchases, and clear the balance before the due date.

4. Never forget to save an emergency fund for your credit protection

A piggy bank can help!

Handling emergencies, including home repairs, car repairs, or medical bills via credit cards, can increase your balance, making the minimum payments difficult to afford, thus, leading to bad credit.

Instead, focus on saving at least $1,000 as an emergency cash (in the beginning) rather than relying on a credit card.

Credit Facts

Good Credit

5. Student loan debt can be helpful in building a good credit

Finally! The word “Debt” being put to a positive use.  

This only works if you have a habit of paying the dues on time. Student loans make stretch the time frame on your bad credit if you miss payments, often pay late, so keep a track of payment dates and deferment rules.

Here’s something extra for you:

How efficient are you at using credit?

Good use of credit

  • Regularly checking credit score and credit report.
  • Using a single credit card sensibly.
  • Clearing all dues every month.
  • Maintaining sufficient balance on credit card.
  • Saving cash as an emergency fund.
  • Tracking timely student loan payments, when applicable.

Bad use of credit

  • Giving least attention to the credit report or credit score.
  • Carrying numerous credit cards or using no credit card at all.
  • Making late payments and having other unpaid debts.
  • Having balances greater than 35% of total credit available.
  • Charging emergencies on credit card; no savings.
  • Ignoring student loan debt or missing payments and deferment dates.

So there you go, these are the 5 golden rules for establishing a good credit history.

Us Millennials should always remember “Slow and steady, wins the race”.