Tools for Success

Four Tips for Establishing Credit

presented by Coast Capital Savings


Establishing credit enables you to be able to borrow money in the future. It proves to a potential lender that if you borrow money, you can pay it back. The sooner you can start building a credit history, the better. There’s a lot of talk right now about credit and how to build yours, so we’re bringing you some simple tips to get started now.

The best ways to establish credit are:

1. Get a major credit card.

Even if you don’t have credit, you may still qualify for a major credit card, especially one with a low credit limit. And always, always pay your bill on time. Make sure you pay your bill a few days in advance to account for processing times.

2. Put your name on bills.

Putting phone and utility bills in your name and paying them on time shows a potential lender you can manage your payments. This is something many people forget about when they move out of their parent’s homes – but get that cell phone switched over right away to start managing your own bills.

3. Find a co-signer who will back you up.

A co-signer is someone who gets signed on to a loan or credit card with you and acts as security. Essentially, they’re vouching for you and saying they’ll be responsible if something were to go wrong. But be careful – if you miss a payment, the co-signer’s credit will also take a hit.

4. Don’t forget that there’s more to it.

It usually takes up to 18 months of clean credit history before you can borrow money, but factors like your net worth, your ability to save money, your income, and your down payment (if you’re buying a house) are also taken into consideration. So use your bank account regularily, and have pre-authorized debits to a savings account set up. It’ll show you have good savings habits and money management skills. And once you have credit, be careful not to have too much, and use it carefully.

Need a little help? Stop by Coast Capital Savings for a Where You’re At Money Chat.