Due to scheduled maintenance, Online Banking, Mobile Banking, and Tellerphone systems will be intermittently unavailable on Sunday, October 24 between 12:00am and 5:00am MDT.
By Sarah Horten – Chief Lending Officer
It’s nearly summer, and the next generation of high school and college seniors are getting ready to take their next step into independence. For those amazing graduates, the next few years will be a whirlwind of new schools, new jobs, and a whole lot of other firsts.
For those just starting out their financial lives, it can be a tough to start building good credit. After all, most loans and credit cards will require a history of on-time payments, showing future lenders that you are responsible. But, how are you supposed to get that without getting credit first!? For those with no credit history, obtaining those loans often requires a cosigner (someone else who is also on the loan that does have that history). A cosigner is also responsible for the on-time payments of the loan. A big responsibility.
Starting life on the right foot, financially, is important. Good credit scores and credit history are essential for those big purchases that need to be financed (think cars and homes!) and your credit can even be a factor when an employer is deciding whether to hire you.
If you’re new to credit, there are a few really important terms you need to know. Your credit score is “a numerical value derived from a modeling system used to predict the likelihood of default.” Experian.com. Two of the most popular scoring frameworks are the FICO® and VantageScore®, and the scores range from 300 to 850. These scores are important to potential lenders when determining whether to issue you credit and how much to charge you for the service (i.e. interest rates). 700 is considered an average score, according to Experian.
The most reliable way to get your credit score into a good range is with good credit history—your record of taking on and paying back debts. Making on-time payments, keeping your credit utilization (the credit you’re using compared to what is available to you) low, and having older credit accounts all help boost your score. Opening a lot of accounts in a small window of time will lower your credit score, so makes sure to space those applications out. An excellent resource for credit score information is www.myfico.com/credit-education.
Keeping an eye on your credit report is also a really good idea, whether you’re starting out or have established credit. Your credit report is aggregated information about your credit accounts and history. You can access your credit report for free once a year at AnnualCreditReport.com. Check it carefully to find issues that may be affecting your credit score. It’s also a really good idea to check your report to verify that the accounts on it actually belong to you. Fraud and identity theft isn’t uncommon, and the earlier you can catch inaccuracies, the easier it is to deal with the damage.
So, how are you supposed to build your score up when you’re just starting out? After all, your accounts, if you have any at all, aren’t likely to be seasoned. You haven’t had the opportunity to make steady payments. A credit card is a way to get started with revolving credit. Credit cards are issued with a credit limit; the maximum amount you can utilize. Keeping your spending low and paying it off each month can really help your credit score increase.
Another fantastic way is to obtain a manageable loan and make steady, on-time payments. Kirtland FCU can help! Kirtland FCU is proud to offer the Jump Start suite of starter loans and programs, just for those with little to no credit history—no cosigner required!
Jump Start Signature Loan
It’s your first loan! With no cosigner required, this small loan is the perfect way to borrow a little ($500–$1,000) and pay it back over 12 months. You will need to meet income and employment requirements.
Jump Start Auto Loan
A car is the first big purchase many of us will make in our financial lives. Qualifying with little to no credit history? Not so easy, and a cosigner is often necessary. With the Jump Start Auto Loan, you can get into that first car with no cosigner. Just meet income and employment requirements, provide a small down payment (at least $1,000) and purchase a car through a participating dealership (check with a representative to find a dealership).
Building credit through manageable amounts of debt with on-time payments is the smart way to build your credit and set yourself up for long-term financial health!
Get started now!