young adult trap under debt

Focus on Avoiding Bad Credit

Getting ready to face adult life on your own as a young adult can be a daunting task especially if you are fresh out of high school or college. One of the most important things at this stage is establishing and maintaining good credit so that you can easily qualify for basic living expenses.  These expenses include a place to live, food, car, healthcare, and other necessary expenses.

Having good credit makes your transition into adulthood much easier. Hoping to land that great first job? The prospective employer might look at your personal financial history before making an offer. Or maybe as a college graduate do you have your eye on renting that beautiful corner apartment? You can be sure that a strong credit history will have a role in getting the rental application approved.

These, as well as various others in your young adult life require you to build a strong financial history. What is also important to remember is that good credit, or lack thereof, is not just critical at this stage of your life, but can have long-term impacts well into your 30s and beyond.

How to Start Establishing Good Credit

Establishing good credit can be easy. All it takes is following some basic dos and don’ts to enjoy a strong financial future.

Learning restraint and applying discipline are the fundamental keys.  This includes not using charge cards recklessly, paying bills on time, setting up a budget and knowing where your money goes.  Additionally, starting to save for emergencies and retirement are some crucial steps that can be taken to establish good credit.

On the other hand, missing payments, splurging on expensive/unnecessary items you have not saved up for, and defaulting on a loan are surefire ways to establish bad credit. Bad credit does not repair by itself. Unfortunately, it has a nasty habit of building on itself. So, taking the right steps right now is very important for you as a young adult to establish a strong financial outlook.

Click here to learn how to read your credit report & score.