Now that we know the various components of a credit report, we can now move on to discussing strategies that can help boost your credit rating. Building a good credit score is extremely important, as it can help you:

This section walks you through the four stages of your credit life:

• Pre-College,
• College,
• New College Graduate, and
• Matured

and outlines direct, actionable ways that you can use to up your credit score in each of these stages.


It is a life-long endeavor to build up a good credit score. So when it comes to credit history building, the rule of the thumb is the earlier, the better. Starting early means that you or your children can enjoy the benefits of lower interest rates rewarded by good credit scores earlier. This will save thousands of dollars when you apply for large loans on your house, car, and education.

A credit profile starts when the first credit account is established. If you are a teenager or a parent, you can take the following 6 initiatives to give your or your children’s credit score a head start:

1. Joint Accounts: Opening joint saving and checking accounts with parents at a local bank can give the teenager an instant credit record. If the account has been managed well, this will bring positive impacts to their own credit history. The teenager can also get a check card from the bank where the joint account belongs.
    
2. Car Finance: If parents are buying a car for the teenager, financing the purchase well under their name can also add positive impact on their credit history.
    
3. Cell Phone: Get a cell phone under the teenager’s name. This will establish a revolving credit account.
    
4. Bill Payments: Parents can teach and allow the teenager to pay all the monthly credit invoices. This will not only enable the teenager build a solid credit history from the very beginning, but also will help him or her to establish good money management skills.
    
5. Authorized Credit Card User: Adding the teenager as an authorized user to parents’ credit card accounts will help parents see how the money is spent. Unfortunately according to the new rules made by Fair Isaac, the credit rating company, authorized user no long gets the same, “free”, credit score. In other words, simply adding a teenager to the parents’ credit card will not help him or her much with their credit history. 

Following the suggestions very well would give you or your children something far more valuable than a new gadget or even a car: a solid 3-5 year credit history. And the best part is it doesn’t cost a dime.

 
Continue to Part II: Credit Building - College Years

 
 

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