Build credit the smart way with these three tips.

Mel Barnes, SVP – Chief Operations Officer

“Credit.” It’s a simple word that can have a major impact on your life and finances. If you want to get a loan on a car, a house, basically anything, hiding cash in your sock drawer isn’t going to cut it. It’s a good idea to have great credit, that much is certain. And the best way to have great credit is to start off on the right foot. But building great credit doesn’t have to be hard or scary. It just takes good planning and discipline. Let’s do this! Here are three tips to build credit the smart way.


Take Out a Loan with a Co-signer with Good Credit

Know somebody who already has good credit, like a parent, sibling or close relative? Do you need to take out a loan, say for a new car? Ask them if they’d be willing to co-sign on the loan. A co-signer is someone who agrees to take responsibility for a loan if you stop paying. Because a bank is unlikely to give a loan to someone with no credit history, a co-signer with good credit gives you the opportunity to get a loan you wouldn’t get otherwise. It helps you build good credit too. Some key pieces of advice: Don’t take out a loan just to improve your credit, only take out a loan you actually need; and, this is most important, do make timely payments. If you don’t, your co-signer’s credit will suffer too. That’s not a good look to someone who’s helping you out. 

Get a Starter Credit Card

You’re not likely to get one of those fancy, shiny metal cards with a $15,000 credit line and tons of perks for your first card. However, there is a great option specifically designed to help people new to credit—a starter credit card. Starter credit cards usually have lower credit limits (about $500 max), an annual fee, higher interest rates, and limited or no rewards. So while you won’t be able to go to Cabo using your rewards points, you will start building up your credit...so maybe you will get that fancy Cabo card one day.

Become an Authorized User on Someone Else’s Account

You might call this the “piggyback method.” Instead of getting your own credit card, you could become an authorized user on somebody’s else account. Again, this could be a parent or close relative. By being added as a fully authorized user (that part is important) on someone else’s account, you can start to build credit as they pay their bills on time. Make sure this person is trustworthy and has good credit though. If they stop paying their bills, it will won’t only hurt their credit, but it will hurt yours as well. 


Want to start building credit? Schedule a sit-down with one of our financial advisors. Contact us!

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