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Good credit is crucial to unlocking many financial opportunities in life. When you have a great credit score, you will see lower interest rates on car loans, credit cards, and mortgages. Some employers and landlords even check credit reports before they make a job offer or approve a resident application.

Building good credit takes time, and adults as young as 18 should consider starting immediately so they have plenty of time to build up their credit score.

Here’s how to start building credit once you turn 18.

1. Understand the Basics of Credit

As you start to build credit, you should understand the basics of how it works.

Your credit report – maintained by credit bureaus Experian, TransUnion, and Equifax – contains data on your current and past debts, payment history, residential history, and more. This data is supplied by many of the lenders, creditors, and businesses with which you hold accounts.

The information contained in your credit report determines your credit score. Higher credit scores are more attractive to lenders and creditors. The factors that influence your score include:

  • Payment history
  • Average age of accounts
  • Credit utilization ratio
  • Account mix
  • New credit

As a new adult, some of these factors may not currently apply to you. However, they can all negatively or positively affect your score, depending on your behavior as a consumer. Educating yourself on credit now will help you avoid costly mistakes in the future.


2. Become an Authorized User

If you have a friend or family member who is willing to add you as an authorized user on their credit card, you can piggyback off their credit card activity to build your credit. Even if you don’t use the card, the account can still land on your credit report and boost your credit score.

This method poses some risks, both to the primary cardholder and the authorized user. If you or the primary cardholder rack up too much debt or miss payments, that activity could end up damaging the credit of both parties.

You should also verify that the credit card company reports card activity for authorized users. If they don’t, your credit won’t see any benefit.

3. Get a Starter Credit Card

Credit cards are one of the best tools around for building credit, but you may have trouble qualifying for one when you have no credit history. Luckily, there are a few credit card options for young people with little or no credit:

  • Secured Credit Cards: Secured credit cards require an upfront security deposit to open. Your deposit will typically equal your initial credit limit – for example, a $500 security deposit would get you a $500 credit limit. These cards are easier to qualify for, but you can use them to make purchases and build credit just like traditional credit cards.
  • Student Credit Cards: If you’re currently enrolled in school, you can apply for a student credit card. These cards typically have low credit limits, but they will help you build credit and they may even offer extra incentives for earning good grades.

4. Make Payments On Time

Making timely payments is the most important thing you can do to build credit, as payment history makes up 35% of your credit score. A positive payment history will help your credit score immensely.

This advice applies to credit cards, loans, utilities like cell phone services, and any other account that requires a monthly payment. No matter the account type, a late or missed payment that lands on your credit report can do significant damage to your credit score.

5. Maintain a Low Credit Card Balance

Your credit utilization ratio, or the amount of available credit you have tied up in debt, is another major contributor to your credit score. Most experts recommend keeping your credit card balances below 30% of the available credit limit.

Ideally, you should pay your balance off in full each month to avoid interest and keep your utilization low.

6. Get a Loan

Getting a loan just to build credit is generally not a good idea, as you shouldn’t take on debt only for the sake of your credit score. But if you have a valid reason, such as needing a car for college, a small loan in your name can help you build credit.

Just like credit cards, loans will only build credit if you pay them on time every month. And if you also have a credit card, getting a loan will help with the account mix factor of your credit score.

7. Monitor Your Credit Report and Credit Score

Now that you’re building credit, you should monitor your credit report and credit score. Monitoring your credit is one of the best ways to learn what will positively or negatively impact your scores. It will also help you catch inaccuracies or signs of identity theft sooner.

You can check your credit report for free annually with each major credit bureau. As you review your report, look for any negative or inaccurate information that could be screwing up your credit.

You can also check two of your credit scores, updated monthly, for free at

8. Keep it Simple… for Now.

The more credit cards and loans you open, the higher chances you have of falling into debt. When you’re just starting out, you should probably play it safe and manage one basic credit card and/or small loan until you get the hang of things. Trying to do manage too many debts at once could get you in over your head.

Over time, you can start to add other credit cards or loans to the mix, diversifying your credit profile and adding more opportunities to build credit. And because the age of your accounts affects your credit score, just keeping accounts open will help you build credit in the long run.

Image: JumpStock


A few months ago, a relative of mine in Sacramento received a call from his granddaughter. She was calling from a jail in Florida after having crashed her car, broken her nose, and getting arrested. She was sobbing, and pleaded with him to not tell her parents or anyone else, and to send money along in the form of Best Buy gift cards so she could make bail. In a panic, he bought a large number of gift cards (to the strenuous objections of the Best Buy employees who were helping him make the purchase) and transferred them to his “granddaughter.” (more…)

One of the most common questions we get asked is, “my health insurance was supposed to cover a procedure, but it didn’t. Now I’m in collections. Is this legal?” The short answer: yes, it is legal, though you may be able to fight back. The long answer, however, requires a bit of context about how insurance companies operate.

Here’s the basic concept behind insurance: a group of consumers essentially pool their money together through an insurance company or agency. This pool is used to cover the needs of each person who has paid into it. The hope is that everyone won’t need to dip into the pool at once, so that when a need for coverage does arise, there’s plenty of money for the person who needs it. This comes with a major caveat, however. And that is your coverage agreement.

When you purchased your insurance plan, you likely had several different options to choose from through the same provider, including a health maintenance organization (HMO), or traditional insurance plan. Each of these plans is designed to offer a different level of coverage, and you can choose the one that best fits your health and overall lifestyle. For example, a younger person in their 20s with no serious medical issues would likely be just fine if they selected the cheapest option available, since younger folks don’t have to visit the doctor as often as a person in their 60s or 70s might. Oftentimes, these less expensive plans have a much higher deductible, which means that the policyholder will have to pay the first $500-3,000 of their medical bills for the calendar year. After that, insurance will kick in and pay up to the plan maximums. While insurance companies and their offerings vary, most plans range within the same average deductibles and coverage limits across the industry. (The exception is the high-deductible health plan [HDHP], usually paired with a health savings account, which are on a whole different level).

Regardless of whether you choose an HMO, HDHP, or another traditional plan, you will still be tied to some sort of agreement about the specific services to be covered or not covered by your provider. Oftentimes, these are fairly general guidelines, since there are simply too many variables that can come into play as far as illness, age, heredity, genetics, and more. Furthermore, every person’s health is so different, they could never outline every possible scenario.

When a claim is submitted, the medical procedure and any related services (such as anesthesia during a surgery) will be compared against your policy to determine if the claim falls within the guidelines set forth by your provider. Some insurance companies are more generous than others, but it’s not uncommon to see a claim denied.

When this happens, however, that could leave you with a sizeable medical bill. You have several options at this point:

  • Pay the bill
  • Appeal the decision through your insurance provider
  • Make arrangements with your healthcare provider for a payment plan
  • Apply for a medical credit card (such as CareCredit)
  • Involve your state insurance department (after exhausting your provider’s appeals process)
  • Ignore the bill

Obviously the last option isn’t a good one, but it’s something many people choose to do because of their financial situation. However, this will send you headfirst into the collections process, which will harm your credit if not immediately resolved.

Appealing the denial of your claim is a good first step. Sometimes, all it takes is a phone call to your insurance carrier. Your doctor may also be able to help you appeal the denial by simply re-submitting the claim. It’s not uncommon for different health insurance company employees to review different claims from the same person and come back with totally different decisions.

If your claim is still denied, you must then find a way to pay the owed amount yourself. While this may seem unfair, and sometimes it really is, it’s usually preferable to falling into serious debt and having your credit negatively impacted.

In the event that your claim is rejected for something you KNOW was supposed to be covered, and your appeal was denied, it might be time to involve your state’s insurance department. This is a state government agency designed to help protect consumers from being taken advantage of by insurance companies. They may be able to help you fight to have your claim properly processed and paid for.

In the event that your claim is still denied and you want to escalate the matter further, you could pursue legal action against your insurance provider. But, be warned: for most people, the cost of legal fees is much higher than the cost of the medical bill and isn’t worth the hassle.

At the end of the day, it’s important to remember that insurance companies are a business, not a care provider. They can be picky about which services they will cover. That’s why it’s imperative that you check with your insurance provider before undergoing any major medical procedure (though this is not possible in cases of extreme emergency, such as a traumatic accident or sudden illness). They can offer a pre-approval on many procedures, and if your request is denied, you can always work with your healthcare provider to keep submitting these requests until you reach an agreement with your insurance company.

Image credit iStock


Not long ago, some poor soul suggested (and probably instantly regretted) the reason millennial’s can’t afford to buy homes is because they spend too much money on avocado toast. While the digital outcry from millennials was instantly indignant, that indigence may have been justified.

Home ownership is difficult to achieve if you belong to the generation with $1.4 trillion dollars in student loan debt. However, it isn’t impossible for millennials to achieve the quintessential American dream of home ownership. While the median home price is roughly 1000 percent higher than it was when our grandparents bought their first homes right out of high school or trade school 50 years ago, there are many ways millennials can prepare themselves for home ownership, and none of them involve selling a kidney.


You can spot a Nigerian email scam without opening it. You know what you’re doing when it comes to keeping ID thieves from conning you. And if someone tried to get the kind of personal information needed to open credit in your name, well, it just wouldn’t happen. (more…)