How to Build Credit at 18

18 is a funny age. You’re too young to drink, and many older people don’t take you seriously yet. But you’re an adult, even if you don’t feel like one.

Whether you’re finishing high school, starting college, or beginning your professional career, 18 is a great age to develop a credit profile that sets you up for a bright future.

On that note, read on for Extra’s four easy tips on how to start building credit at 18:

Understand Credit Scores

Just because a credit score is essential doesn’t necessarily mean it’s easy to understand. On the scale of topics worth studying, it’s closer to algebra than the A-B-C’s.

However, if you know the basics, you’ll be fine. Here are the factors that determine your credit score:

Payment History: 35%
Total Debt: 30%
Length of Credit History: 15%
Credit Mix: 10%
New Credit: 10%

As you can see, the most important categories are your payment history and total debt – i.e., your credit utilization ratio. The lower your debt and the more often you pay off what you owe, the better your credit score will be.

At 18, the length of your credit history will be short. That’s why it’s crucial to start building credit ASAP – using some of the methods we discuss later – and get the ball rolling.

Lastly, your credit mix – the variety of different credit accounts you have (loans, credit cards, etc.) – and new credit, which factors in how often you applied for access to credit, are also important to consider.

Learn How to Check Your Credit Score

For people with bad credit, checking a credit score can feel like looking at your bank account after a rowdy spring break trip. Or peeking at the grade for your essay on a book you didn’t read.

However, you’re brand new to the credit game!

If you’re smart, your score will only go up from here, so it’s important you check it semi-regularly – much less often than you look at your Instagram, probably more than you peek at your Facebook.

An easy way to check your score for free is using annualcreditreport.com; you can also check it through your credit card provider or by signing up for credit services like Experian or Equifax.

Once you see your score, here’s an easy way to evaluate it:

>720: Excellent
690-719: Good, keep at it
630-689: Fair, but nothing to write home about
<629: Not good, not good at all

Plus, if you still want to learn more about your credit, Extra has you covered with our Credit 101 blog.

From how to start credit development to deep dives into lines of credit, building credit with a debit card, and even disputing your credit report, we’re on your team every step of the way – like the person in a group project that always pulls their weight. Who doesn’t love them?

Check out EXTRA

EXTRA is the first debit card that helps you build credit, combining the benefits of debit and credit. No gimmicks, no catch!

After you sign up – no credit check required – we connect your EXTRA card to your bank account and create a spending limit based on your existing balance.

We’ll spot you for each purchase you make, then automatically pay ourselves back the next business day with no interest or hidden fees.

At the end of each month, we total up all your transactions and report them to the major credit bureaus as credit-worth payments, helping you build a solid credit score.

Plus, you’ll enjoy great rewards like discounts on everything from AirPods to meal kits from Blue Apron.

Sounds pretty great, right?

Try it out for yourself — check out how to get started with Extra for super easy spending.

Apply for a Loan

Of course, applying for a loan is only a wise decision if you need one. However, if you’re 18 and headed to college soon, odds are you do. Tuition, room and board, and overpriced books are inevitable in student life.

Getting a student loan with a favorable interest rate and repaying it on time can be a great way to build up your credit slowly — ditto for car loans or any personal loans you may need.

If you’re lucky and don’t NEED a loan but still want to start building credit, you can also take out a credit-builder loan, the bicycle with training wheels of the lending world.

Credit-builder loans are not as common as traditional options, and they function differently:

Rather than receiving your loan up-front and paying it off over time, credit-builder loans require you to deposit a set amount into an account each month, and at the end of your loan term, you’ll have fee-free access to your money – often with added interest.

Think of this type of loan as an internship that leads to an actual job. It’s an opportunity to prove that you’re competent and responsible enough to access better opportunities in the future.

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