Soon after turning 26, I logged into my bank account to check my current FICO score. I remember this moment because it was the first time my credit score crossed from “good” to “excellent”. This achievement came largely from the fact that I had been thinking about my credit score and improving it for a long time – a process I started well before I applied for a loan or credit card.
In fact, more than a decade earlier, when I was just 13. Why so young? As the only fluent English speaker in a household of immigrants, I became the family’s main researcher, by dint of my language skills.
The lessons I learned then gave me the tools and knowledge to achieve a high credit score and a solid financial future at an age when most consumers are barely building their credit history and score. Here’s how I did it.
I Got Added To My Family’s Credit Card
The biggest challenge most young adults face is simply getting started. Building your credit score requires you to have open credit accounts added to your history. At the same time, it’s difficult to get a credit account without credit history. This is why, at 17, I asked my parents to make me an authorized user on their credit card.
The first beautiful aspect of this approach is that the authorized user doesn’t need any credit history, since he or she piggybacks on the history and score of their family. This move put my name on the map and made me visible to the credit bureaus. Considering close to eight million 18 and 19 year olds in the U.S. are credit invisible or unscorable, this was no small feat.
Also a thing of beauty, and family harmony, is that while I was issued my own card when I was added to the account, I didn’t use it. Contrary to popular belief, a credit card can contribute to your credit score without you actually ever using it.
Of course, the trick doesn’t work if your fellow family members have lousy credit. I only chose to join in on because my parents were financially stable and made their payments on time. FICO includes both positive and negative marks from the main account and applies them to authorized users as well. Your record is only as good as the credit behavior of the adults who are actually buying on the account and paying its bills.
I Chose A First Card That Worked Well For Me
By the time I was ready to open my own credit card, being an authorized user allowed me to apply for considerably better offers. I could get a good card that didn’t come overloaded with fees.
This may seem like a small thing, but it made building up my credit history considerably easier going forward. Since my first credit card was one I liked, I didn’t see it as a burden. I paid my bill in full each time so I didn’t have to deal with interest charges. The card also had no annual fee and did not require a security deposit, so I didn’t have to pay to have or use the card. My first credit card was something that could build my credit without any real investment on my part.
I Monitored My Credit Score
Early on, I erred by opening too many new credit cards. I became dazzled by bonuses and all the rewards cards around, and signed on for three new accounts. The net effect was to bring down the average account age of my credit, and my score dropped along with it – by 30 to 40 points.
However, I caught my goof fairly quickly because I was monitoring my credit.
Once I saw the impact of my spree, I stopped applying for new accounts, and my age of credit eventually bounced back up, with my score following suit.
No amount of online tips and tutorials can substitute the knowledge you’ll get from monitoring your credit score online. There’s no shortage of free resources that allow you to access your score, and to identify some of the major factors that have shaped it. Credit Karma, one of the more popular tools, has been around for over a decade. Even some major U.S. banks have joined the fray. Late last year, JPMorgan Chase rolled out a service that is very similar to Credit Karma. Beyond that, people can also get their credit report for free every year through AnnualCreditReport.com, a secure resource recognized by the Federal government.