When you’re just starting out with credit, it can seem like trying to push a rock up a hill. Some lenders will want to see you already have credit before they will give you credit. At the same time, even though you haven’t had a chance to do anything wrong with your credit, you may also start out with a relatively weak score. A few other things can trip you up as you work your way toward strengthening yourself as a borrower.

 

Being Young

One of the components of most credit scores is the length of your history. The longer you’ve had credit and used it wisely, the better. Unfortunately, if you’re young, you haven’t had much time to build up your credit usage. You can’t really change this other than by waiting and getting older. If you haven’t opened any credit accounts yet, it might help to start one sooner rather than later, so you can get started on creating your history.

 

Using Too Much of Your Credit

One of the most influential items that impact your credit score is the percentage of your credit you are using – or your utilization ratio. Generally, the lower each of your credit card balances are the better off you are. The more credit you have available and the less of it you use, the lower your utilization will be and the stronger you will appear.

 

The Wrong Mix

Credit scores look at the mix of different types of credit that you use. If you have only one type of credit, like a student loan, you might not have as high a score as someone else who has student loans, car loans and credit cards. In addition, using credit for the “wrong” things can also hurt your score. For example, buying a car using a credit card instead of a car loan might hurt your score.

 

 

About the Author
Solomon Poretsky has been a writer since 1996, with experience in the fields of financial services, real estate and technology. Poretsky holds a Bachelor of Arts in political science from Columbia University.

 

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.