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Question for the Money Doctors

Question submitted on Feb 11, 2013.


I''m 20 years old, and I want to begin to build credit. What is the best way?


Building credit begins with obtaining and reviewing your current credit report, to first make sure that it is accurate and that you haven''t been the victim of identity theft and second to set a baseline. Correct any errors by contacting the credit rating agency in writing.

Next, open up a checking and a savings account in your own name with a Bank that will also give you a credit card with a modest credit limit. Many Banks have attractive student checking and credit card programs. Otherwise, retailers such as Macy's are an option for your first credit card that is a combination store/Visa card. Use your credit card to buy only what you can afford and religiously pay off your credit card balance in full each month to avoid paying high interest rate charges on unpaid balances.

Please do not forget to pay your credit card balance on time, because not paying at least the monthly minimum balance due will make your credit score worse. Develop a routine for going online to check your credit card balance and simultaneously pay the credit card balance due electronically from the funds in your checking account, even if it is before the due date.

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