One of the biggest disadvantages to young adults on their credit profile is a lack of credit history.
In a survey released by credit-reporting agency Experian, young homebuyers worry about having low credit scores so much that they do not consider applying for a mortgage.
It takes years of financial responsibility to achieve great credit. Here are a few ways for millennials to improve their credit profile.
Check your credit – This is both a literal and figurative “look in the mirror”, but won’t directly be responsible for improving your credit record. By law, the three major credit bureaus – Equifax, Experian and TransUnion – must provide you one free report per year. You’ll need to take the initiative, but this is a helpful way to analyze your current credit standing.
Open a credit card account – Student loans are increasingly common amongst college graduates and credit cards can help establish credit history while you’re still in school. Establishing a credit line and consistently repaying it on time can help maintain a positive credit history. Credit cards can be just as helpful to your credit as they can be detrimental. A good rule of thumb to follow is to keep low balances on your credit card, or less than 30% of the card’s limit.
Knock down any major debts – One of the best ways to improve your credit score is to pay down major debts that carry interest. Student loans can be helpful, but so too are auto loans and any other major debts you may incur along the way. Maintain healthy savings habits to make your monthly payments and repay any extra debt as you can afford it.
NASB offers several mortgage assistance programs for buyers who have limited credit, or whose credit history does not qualify them for more traditional loans. For more assistance in financing a mortgage, or for other savings advice, contact a NASB representative today at 855-465-0753.