In adulting life realtalk

Building Credit in your 20s

Your credit score is one of those super scary, ultra-adult things that I had no clue about going into my freshman year of college. It's been about three years since I've started taking my credit seriously, and I went from absolutely zero credit to damn good for a 21 year old (and I bought a new car!).

For those of you who are still unsure about what credit is and why your credit score is important, think of it as a record of your borrowing habits and responsibility. Banks offer loans for big purchases like cars and houses, but before they give you a big lump sum, they want to make sure you're actually going to pay them back. This is where your credit score matters, so banks know you're a responsible enough adult to pay back your loans.

While being 18 or 19 and having no credit is fine, the problem is when you're in your late 20s or early 30s and STILL have no credit. Maybe at that point in your life you'll want to buy a house, or start a small business, and you want to be able to fund those sorts of life decisions. I'm about to be 22 and my boyfriend and I are starting to look for our first house together, something that wouldn't be possible if I had ignored my credit for the past few years.

When I started college I had absolutely zero credit because I had grown up with the idea that credit cards were bad news. Now before I get started into the tips I want to say that I'm not a credit expert, and that there are many ways to improve your credit. My boyfriend works for a credit union, so these are just tips that he and I did to improve our credit scores.

Also, I want to mention the difference between credit unions and big banks. I personally like credit unions because they're not-for-profit, so they won't gouge those of us just starting out. Also I feel way more comfortable talking to a banker in a credit union who can talk for hours to me in plain English about ways to improve my score.

1. Get a secured credit card

A secure credit card was my first step in earning some credit. Basically how a secured card works is you give the credit union (or big bank) a lump sum, say $550 (but it can vary). They hold onto this money and issue you a credit card with a $500 limit. From there you can use and make payments on your card.

Your secure card is going to help you build your credit as you use and make payments on it. If you can't make your payments on the card, or max it out and can't pay it off, the credit union takes that lump sum and covers your balance. This way you if you lose track of the card or something crazy happens the bank still gets paid. That means these secured cards can hurt your credit if you're not careful. We'll talk about some tips for using your card in a bit.

When you eventually decide to close the credit card, you can use that $550 to pay off your balance and get the rest back. But don't close out your secure card once you "graduate" to a normal credit card. Credit Reports look at how long you've had lines of credit, so the longer you can keep them open the better. I closed mine off a little early and lost a few points

2. Sign up for Credit Karma

They aren't even paying me to say this, but Credit Karma is a great way to quickly keep tabs on your score. It will show you your card utilization (more on that later), payment history, derogatory marks (debts that have gone to a collector), total accounts, hard inquiries (trying to open new lines of credit), and age of your credit history.

Just be weary of those card offers in the app because they sometimes have really high interest rates. Your score updates about once a month, so this is one of the few apps on my phone that I allow notifications, and check it every time there's a change.

My credit union also offers a free credit monitoring and identity protection thing with my accounts, so be sure to ask when you open up your secure card about any free programs. The one from the credit union pulls your full report, so you can see EVERYTHING about your credit score which is cool if you're a numbers nerd like me.

3. Use your credit card wisely--shocker!

This is one thing that I really struggle with, but it's best to keep your Credit Card Utilization between 30%-50%. That means if I have a $500 credit card limit, I don't want to keep any more than $250 charged on it. That also means I want to make sure I have about $150 charged to it.

Having some balance roll over month to month shows that you're using your card and are a responsible adult enough to make regular payments on it. Avoid using your card on small, one-off purchases because they add up insanely quickly, things like coffee, lunch dates, and the sort. Rather, there are two sort of approaches to using your credit card a) for smallish, regular purchases and b) larger purchases you'd make anyway.

Your smallish regular purchases are things like your Book of the Month subscription, or gas, or groceries. These types of charges are nice because theres not surprises when it comes to making your payment, and you can schedule regular payments and forget about it basically. Your larger purchases are things like school textbooks, clothes for work, or other things you'd buy even without credit.

4. Be Selective about credit Cards

After a while of using your secure card you'll be ready to graduate to a normal credit card. I really don't recommend getting a store credit card for clothes, or furniture, or underwear. Store credit cards have an insane interest rate (like 25%) compared to normal or secure credit cards. And these cards are pointless if you don't shop at the place very often.

If you are going to get a store card make sure it's somewhere you go to often (more than once a quarter), something you need, and that you really really enjoy shopping there. Most of the time the points and discounts aren't good enough to outweigh the interest rate.

The only store cards I'd even possibly consider is a Gap or Old Navy card because I can get literally any clothing item I need. But at the same time I don't shop that often and am starting to look for more sustainable clothing, so that's a no.

The point of all this is to say think about your shopping habits and the things you like to spend money on before getting a store card. If you like variety and don't shop religiously at one store, then open a normal credit card once you've got the credit.

5. Take out a small personal loan

This is one of the more unconventional ways that my boyfriend used to increase both our credit scores. We signed up for a small loan of about $1,000 from the credit union, then dumped that money right into savings. We then used the loan money to pay off the loan, which sounds dumb and totally pointless, but it really did increase my score!

Talk with your banker at the credit union about different options they have and don't be tempted to spend the money on anything else. Put it away in an account, set up automatic payments and forget about it. This does a few things, increases your lines of credit (which is a good thing when you're just starting out but too many is bad) and adds some regularity to your credit score. This is a much safer to build credit than opening up a bunch of cards you're never going to use.


Your credit score eventually becomes really important and your early-mid twenties is the perfect time to start building it. While there are a lot of ways to build credit, secure credit cards and working with a credit union are great places to start.

What are other ways you've heard of building credit? Do you feel super grown up knowing all about credit now? Comment below!

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