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7 Healthy Credit Habits to Start Today

Mother and daughter reviewing homework in the kitchen.

Building healthy credit habits might not sound thrilling, but it’s crucial for your financial future. It is essential that you practice healthy credit habits once you get access to credit to ensure you are building positive credit history. A credit history is what allows lenders to know whether or not you’re trustworthy enough to give more credit to, usually in the form of a loan. This is what’s used to determine your credit score. Not having a credit history means not having a credit score, which makes it harder to get loans and lines of credit like a car loan, credit card, or a mortgage.

Here are some important tips on healthy credit habits to start practicing today, whether you’re starting from scratch or are re-building positive credit.

Build Credit History

The longer your credit history, the better. Start building credit early by becoming an authorized user on a parent’s credit card or opening a secured credit card in your name (and using it carefully!).

Pay On Time Every Time

Seriously, this is arguably the most important rule. Whether it’s your phone bill or a credit card payment, always pay on time. Late payments can really hurt your credit score.

Spend Money Wisely

It’s so tempting to splurge when you have a credit card, but remember, not only do you have to pay it back, you have to pay MORE than what you spend. Only use your card for purchases you can afford to pay off in full each month to avoid racking up interest.

Keep Balances Low

Try to keep your credit card balances low relative to your credit limit. This percentage, called “credit utilization,” shows lenders that you can manage credit responsibly and makes up a huge portion of the credit score equation.

Limit Credit Applications

Every time you apply for credit, it results in a hard inquiry on your credit report, also referred to as a “hard pull.” This can lower your score for a while, so it’s a good idea to be selective about the credit you apply for and only apply when you really need it.

Monitor Your Credit

Keep an eye on your credit report and score regularly. You can get a free report from each of the three major credit bureaus once a year. Look out for any errors and report them immediately. You can also freeze your credit and only unfreeze it when you know there will be a hard inquiry. This prevents fraudsters from being able to take out a line of credit in your name.

Be Patient

Building good credit takes time, so don’t expect instant results. Stay consistent with your healthy credit habits, and your score will improve over time.

Remember, your credit score is like your financial report card—it can affect your ability to get a loan, rent an apartment, or even get a job! So, start practicing these healthy credit habits now, and you’ll thank yourself later. Your future self will be proud of you!

If you have additional questions or need personal guidance on your financial wellness journey, we have a number of resources available to you. You can find out more about our Financial Wellness team and our other financial education resources on our website.