These days, there are plenty of (often financial) challenges which young people face, such as one of the worst wage squeezes in history and high student debt. As such, it is more important than ever for them to ensure that they adopt the best possible practices when it comes to financial matters.
Credit history should be taken seriously, as it provides an overview of a person’s debt history, showing a lender which loans they have taken out and if/when they were repaid. Here are some considerations.
How to Build a Good Credit History
It may at first seem difficult for a young person to build a credit history at all, since they will, in most instances, have had few experiences with loans/credit. There are, however, plenty of ways to begin building one. Paying off any outstanding debts is a good start, as is meeting repayments on time, every time.
Even a young person with a poor credit history can improve it. Some specialist firms like Ocean Finance offer credit cards specifically designed for those with a bad credit history, helping them to take steps towards having a stellar history.
Access to Loans
One of the most significant advantages of building a good credit history is that it opens doors in terms of access to various different loans. This could include a mortgage, bank loan or even a payday loan.
This means that young people can gain access to potentially life changing money which those with a poor credit history simply cannot. It also means that they can be well prepared for unexpected events, such as having to make emergency repairs to a property at short notice.
Another benefit of building a good credit history is that it allows young people to learn the ins and outs of good debt management, which can be especially challenging with multiple debts (as well as having to pay bills).
By learning good debt management practices (such as meeting monthly repayments and budgeting for the debt) early in life, it is possible to avoid major financial disasters (such as debt spiralling out of control) further down the line.
Building a good credit history is usually done over a long period of time, but it is wise to plan it out and ensure that all loans are affordable and can be repaid on time. Always remember that a good credit history is essential to getting more credit in the future.