Just like everything else in life, such as prioritzing our spending, things change as we get older. Sometimes these changes occur based on our our attitudes, maturity level, or just because we get tired of the old routine.
Change is also true when it comes to you and your credit. Let's take a look.
In the early part of your adult life, when you're in college and just beyond graduation, you need to esablish good credit so you'll be able to borrow later on for things like a home. This is the stage in your life where you need to prove yourself worthy to creditors. Here's whats' needed:
- Know the balance on your credit card; if it is exceeding 30% of your limit, stop using the card. Balances above 30% of your limit will reduce your credit score.
- Get a card you'll keep for a long time; this will establish history for you. The longer, the better.
- Take out different types of credit besides your credit card. This would mean car loans, accounts at stores. Be careful not to overdue it. Having an account with the electricity company is also a way to establish credit.
- Pay every bill on time. That means the credit card bill, the electricity bill and everything you owe.
The next part of your life, from your mid-30's to 50, you need to maintain and contain yourself.
- You should have enough credit accounts by now; keep them clean by always paying on time, not exceeding 30% of your limit, and avoid opening new ones. You have enough!
- Start paying down your debt as your earning power increases; this will increase your credit score substantially.
- Now that you have a credit history, review your credit report periodically to make sure there are no errors; if there are, dispute them and make sure your report is clean.
Once you're in your 50's, things change once more. Try and shoot for being debt-free by the time you retire. Living in a home that is completely paid for is great for your peace of mind. Keep reviewing your credit report as well, as older people are more vulnerable to fraud.
Which stage of life are you in currently? Are you doing the right things to make sure your credit is good?