What is Credit and Why Do We Need It? 

Credit is an agreement between a borrower and a lender, where the borrower agrees to repay the loan with interest at a later date. It also refers to a person's ability to repay their debts. Your credit report and scores tell lenders if you have good or bad credit. Credit plays a crucial role in various aspects of our lives, from purchasing a car to securing a mortgage. 

Building Good Credit: The Basics 

Unfortunately, not everyone starts with a high credit score of 800+. It takes effort and time to build. Here are some tips to get you started on your credit-building journey: 

How to Build Your Credit Early 

Starting early is the best way to establish a solid financial foundation before reaching milestones like buying your first car, applying for a mortgage, renting an apartment, or getting a loan. Good credit opens doors to lower interest rates and better loan terms, leading to lower monthly payments. Here are some key points to keep in mind: 

• Starting from Scratch: Beginning with a low or non-existent score can feel daunting, but it's a normal part of the journey. 

• Financial Responsibility: Being financially responsible is vital. Timely payments have a significant impact on your credit history. 

• Seeking Help: Having a mentor or someone to guide you on your credit-building journey can be beneficial. Becoming an authorized user on someone’s account or having a co-signer can boost your credit. 

• Setting Goals: Knowing your financial goals helps you stay motivated. Whether it’s buying a home, getting a loan for school, or starting a new business, a high credit score can help you achieve better interest rates. 

Simple Tips to Build Your Credit 

Building credit can seem overwhelming, but these simple tips can help you get started: 

1. Become an authorized user on someone’s credit card who has great credit. 
2. Open one credit card to start your building journey. 
3. Apply for a loan. 
4. Use a co-signer. 
5. Create good credit habits. 

Building credit is a journey that takes time, patience, and consistent effort. By starting early, staying financially responsible, and seeking guidance when needed, you can pave the way to a strong credit profile.  

Learn more about how you can manage your credit score and spending within digital banking!