How to establish credit as a young adult

[kst$]

This is a great how to on establishing credit as a young person or as a new person to the country.

Whether you are a young adult or just arriving in the country, establishing your credit will be an important aspect of your introduction to the financial world. Many important decisions ranging from finding a job all the way to a mortgage will rely on your credit. Follow these steps to help you establish credit in a smart and secure way.

I will definately pass this on to my young adult children and there friends just starting out.

How To establish credit
by GabiBabba

[moneysense]

Any information that we can give our young adults to ready them for the real world has to be one of our top priorties.

It is hard enough right now for us to make it with the economy being the way it is and I am sure it will get harder yet and the young adults will be feeling the full brunt of the sagging economy.

We need to verse them on checking, savings accounts, car insurance, life insurance, budgeting etc, to make sure they get a good healthy financial start to their adult lives.

[beaston]

While I agree with most of the article, I still have a problem with pushing young adults towards getting credit cards. Most young adults today are too irresponsible with money to have a credit card, and will only get into trouble with them. Credit card companies see this, and prey on young adults. Why else would they cater to college students? This is an older (2006) article, but as you can see, even the colleges are working with credit card companies, and getting kickbacks in the process.

Despite rising concern about college students' debt loads, the nation's largest four-year colleges are disclosing students' contact information to credit card-issuing banks and earning up to millions each in annual fees by giving the banks the right to market on campus.

Here's another sad story as well -
http://www.usatoday.com/money/perfi/...dit-usat_x.htm

But these steps belie a stark reality: Credit card marketers today are as aggressive as ever — just more creative — about reaching students. Some solicit students by phone or e-mail, and flood their mailboxes with credit card applications. Other marketers set up tables around heavily trafficked campus areas, hawking free sandwiches or pizzas to hungry students to get them to sign up for a credit card.

In my opinion, the only time you should go into debt is to buy a house.

Some may say that if you don't have credit, you will have a hard time getting financed to buy a house - which is not true nowadays. As long as you have sufficient income, been at your job or have worked in the same industry for the past 2+ years (the longer the better) and have a decent (10%+) down payment, not having any previous credit will not hurt you as much as you think.

Even if you're paying 1 or 2 points higher on your initial interest rate, after you have been paying your mortgage on time for a year or two, you can always go back to the bank and refinance the remaining balance and get a better interest rate.

The key point is to not have anything bad on your credit report. As long as you pay your rent, utilities and other bills on time, you shouldn't have any problems.

The bottom line is pretty much that there's no reason to go into debt for anything besides a house. The hardest thing for any of us to do is to live within our means. I, for one, would much rather put back $x every month in a savings account instead of having to pay interest to that same bank, just so I could drive a nicer car, or to the credit card companies so they can get richer and richer. Shouldn't we be the ones getting rich?

[rachael24]

Thanks for the link...Im fresh out of college, and I really want to start building a solid credit background. This is a good start!