All parents want to ensure their children have every opportunity to succeed in life. Teaching teens how to build credit positions them to take advantage of lending opportunities as young adults. Unfortunately, people between 18 and 25 years old, identified as Generation Z, have the lowest average credit scores of any demographic at 679. But by better understanding why establishing creditworthiness early is important and taking the steps to acquire a good FICO score, your child could enjoy greater financial success.
Americans have an undying love of automobiles and the sense of freedom they offer. Purchasing a new car or a reliable pre-owned model allows you to travel to favorites restaurants, social events, or just take a weekend road trip to anywhere. Cars, trucks, and SUVs equal freedom, and having the right credit score puts you in the driver’s seat.
Purchasing a home typically represents the largest financial investment families make. That’s why lenders take a long look at a mortgage applicant’s credit score, among other factors, to assess whether they can afford the loan and responsibly pay it back on time.
Some of life’s greatest milestones such as buying your first car or getting the keys to your family’s home typically require the help of financial assistance. Before you seek out an auto loan, mortgage, or other loan option, your first step should be to review your credit report. A quick credit report review can help you identify and fix errors that could result in a higher credit score. These few moments of your time can lead to an increased chance you’ll qualify for a loan and receive a lower loan interest rate saving you money.
If you are unsure what a FICO score is, and what’s the difference between a FICO score vs credit score, you are not alone. Having the answers to these questions and having a working knowledge of your FICO score and how to manage it could significantly impact your financial health.
Credit scores impact our lives every day. Although many of us do not apply for mortgages, credit cards, or other loans daily hoping to be approved based on our credit, credit scores do impact our monthly loan payments, weekly budgets, and even our employment and housing.
Whether you're new to the world of finances and need to learn how to build credit without a credit history, or you’ve made some mistakes and are dealing with a low credit score, you may find yourself wondering how to increase your credit score. There are six steps you can take to learn how to build your credit and create a healthy financial foundation for yourself. By following these, you can enjoy the benefits of a credit-worthy score both now and in the future.
Membership in America’s Credit Union is open to anyone who lives or works in Dallas, Rockwall or Collin Counties, Texas, and their family members. Employees of select employers may also be eligible. See our Membership page for details.