Millennials are saddled with debt. In fact, three out of every four in this age group have some form of debt. A quarter have more than $30,000 in debt and another 11% are more than $100,000 in the red. Only 22% of Millennials are completely debt-free.
Building credit can be a challenge when debt makes it difficult to make ends meet, but little actions can add up to big effects.
Pay Your Bills on Time
It should go without saying that you should pay your bills on time. Many people forget the importance of this simple step when building their credit.
Failing to pay your bills on time can lead to hefty late fees and can really put a dent in your credit score.
If you have trouble paying your bills on or before the due date, here are some tips to help you get back on track:
- Try calling your creditors and asking if they can change your due date.
- Set reminders on your phone to pay your bills before their due dates.
Paying your bills on time – every month – will help build your credit and improve your score.
Get a Credit Card if You Don’t Have One Already
If you don’t already have one, apply for a credit card. Your payment history accounts for a good chunk of your credit score – 35% – so make sure that you have at least one credit card.
It’s also important to have a mix of different types of debt, so paying off student loans or a car loan may not be enough to sufficiently build credit.
If you’re concerned about being approved for a card, consider applying for a secured credit card. Secured cards require you to post collateral, but they will help you build credit. Because lenders face little risk, getting approved is quick and easy.
Once approved, make sure that you only use your credit card for emergencies or purchases you already have the money for. Unnecessary purchases or purchases you can’t afford will only set you back further when trying to build your credit.
Check Your Credit Reports for Errors
Every year, you’re entitled to a free credit report. Make sure that you take advantage of this perk and check your report for errors.
If there’s a mistake on your credit report, you can petition the credit bureau to have it removed. Removing the error may significantly improve your score and your credit history
George is the CEO of Expat Group Limited, based in Hong Kong.