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Build Your Credit with Confidence: A Guide for Recent College Graduates

As a recent college graduate, you’re stepping into a world filled with new financial responsibilities. While improving your credit might not seem urgent, starting early can be incredibly beneficial. Your credit impacts many aspects of your life, from qualifying for rentals to obtaining rewards credit cards. Good credit is especially crucial when it’s time to buy a car or home. Even if you don’t take out a loan, good credit can save you money, as insurance companies often consider your credit when determining rates.

Here are five simple steps to help you understand and build your credit:

1. Check Your Credit Reports

Knowing your credit status is essential. Your credit history is documented in credit reports, which are maintained by three major credit reporting companies: Experian, TransUnion, and Equifax. If you haven’t had a credit card or loan, you might not have a credit report yet. You can establish your Experian credit report quickly with Experian Go™. If you already have a loan or a student credit card, you likely have a credit report. Reviewing your credit reports is crucial as creditors, landlords, and employers may review them before approving applications. Ensure all information is correct and be ready to explain any negative marks.

2. Understand How Credit Scores Work

Your credit reports form the basis for your credit scores, which help creditors assess the likelihood of you falling behind on payments. FICO and VantageScore® are the most widely used scoring models. Key factors influencing your credit score include:

• Payment history: On-time payments boost your credit, while missed payments can hurt it.
• Credit usage: Using a small portion of your credit limits is best.
• Length of credit history: The longer your credit history, the better.
• Credit mix: Experience with different types of credit can be beneficial.
• Recent activity: Applying for new credit accounts can temporarily lower your score.

3. Start Paying Off Your Student Loans

Many graduates leave school with student loan payments. Making timely payments is crucial for building good credit. If you’re struggling, explore different repayment plans to find one that fits your budget.

4. Apply for a Credit Card to Build Credit

Having multiple credit accounts can improve your credit score. Credit cards are a simple way to do this and often come with rewards and protections. Follow best practices like not spending more than you can afford, paying your balance in full, and making early payments if you have a high balance.

5. Get Credit for Other Monthly Payments

Most credit reports focus on loan and credit card payments, but you can also add other types of payments. Experian Boost® allows you to add eligible rent, utility, cellphone, and select streaming service payments to your Experian credit report, potentially improving your credit score.

Building credit takes time, but understanding how credit reports and scores work gives you a solid foundation. Making timely payments on loans and credit cards can lead to an excellent credit score. Experian’s free credit report and score monitoring can help you track your progress and provide insights into what’s affecting your score the most.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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