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If you’re just starting your career, you’re likely discovering there’s a lot to learn—about your job, your “adult responsibilities,” and, especially, your money.

One of the most important lessons as you strive toward financial independence is how to build and maintain good credit.

“Credit is essential for securing the affordable loans needed to purchase a car, pay off student loan debt, or buy a home,” says Josh Evans, Consumer Lender at The Grant County Bank. “Building and maintaining good credit requires knowledge, good habits, and smart financial decisions.”

The Grant County Bank wants you to have the good credit you need. In this blog, we’ll explain what good credit is, how to get it, and how you can keep it.

How to start building credit

You begin building credit once you start having bills to pay in your own name. And, as most people soon find out, good credit is a must to get a loan with a favorable interest rate.

Three great strategies for starting to build credit are co-signed loans, cash-secured loans, and smartly using a credit card.

If you haven’t yet established a credit history but you need a loan, you may need an individual with a favorable credit rating to co-sign for the loan.

A cash-secured loan is pretty much just what it sounds like. You borrow an amount that doesn’t exceed the amount of cash you have on hand. For instance, you might seek a cash-secured loan for $1,000 if you have $1,000 in the bank—a great way to get access to extra cash without going into debt.

“A credit card also represents a great option for building credit—if you use it in the right way,” says Evans. “An effective approach to building credit with a credit card is to only use it when gassing up your vehicle. That will help keep the balance low while allowing you to build credit.”

Common mistakes and myths about credit

While co-signed or cash-secured loans and “gas only” credit card use are smart ways to build credit, Evans points out that there are multiple mistakes that can have the opposite effect on your credit.

• Applying for too many accounts—While a credit card or personal loan can help you build good credit—if you don’t miss payments—applying for too many accounts can hurt your credit score. Keep your accounts to a minimum and keep up on your payments.
• Maxing out credit cards—While maintaining a low balance on a credit card will help your credit, charging so much that you approach or reach a card’s credit limit is dangerous.

“Unexpected expenses are a fact of life,” says Evans. “If you’ve maxed out your credit card, you’ll not only hurt your credit score, but you’ll also have less available borrowing power to cover them.”

• Keeping high balances—High credit card balances will take longer to repay, require a larger monthly payment, and lower your credit score—a combination you will want to avoid!

In addition to avoiding common mistakes, Evans also points out the need to be mindful of common myths about credit.

One such myth is believing you have only one credit score. In truth, there are three main credit reporting companies (also known as credit bureaus)—Equifax, Experian, and TransUnion—that compile borrower credit scores lenders access when making loan decisions.

“These agencies rarely report the same score,” says Evans. “Don’t assume that one score is the accurate one.”

Another myth is that regularly checking your credit score will improve your score. This is not true. As Evans reminds borrowers, “Your smart decisions and good money habits will positively impact your score. Checking it regularly will not.”

Be smart about credit

Building good credit is important, but it isn’t complicated. Do the following and you can’t go wrong.

• Establish good money habits. Spend less money than you make, don’t go deep into debt, and keep your credit card balances low.
• Pay on time. Few things will wreck your credit faster than late or missing payments. Pay your bills when they’re due to keep your credit score healthy.
• Understand your credit score. Know what impacts your credit score—on-time payments, low balances, the length of your credit history, etc. Also, if you suspect a credit bureau has made an error in calculating your score, request a copy of your credit report and check it closely for errors. Remember, your credit score is your responsibility.
• Use available tools from your bank. The Grant County Bank makes it easy to keep track of your money with mobile banking features that include online bill paying, low-cost or free options for sending or receiving money, budgeting tools, tools for credit monitoring.

“Our online credit score analysis tool shows you what you are doing well in your credit usage and where you could improve,” says Evans. “We also offer an online credit score simulator that provides an estimate of what could happen to your credit score if you were to open a new account, pay down credit card balances, or pay off an auto loan. It can also show you the estimated impact if you were to miss a payment.”

How The Grant County Bank can help

In addition to the tools we make available to help manage your money and your credit, The Grant County Bank can help you access the money you need to buy a car, a home, or pay for your education.

We offer loans tailored to your needs and financial goals, and payments that fit your budget. Contact us to learn more.

Build credit for life

Credit is a tool. And for it to serve you well, you need to properly maintain it by adopting small, consistent habits.

Ready to start building credit the smart way? Connect with a The Grant County Bank lender today and take control of your financial future.