Credit Advice while you are in your 20s

For most of us 30 and older, our 20’s were an amazing time in our life. This precious decade was full of moments and memories that shaped the adults we are today. And while these years were primarily focused on “finding yourself” and enjoying life, financial responsibility may not have been a priority. Part of the fun of being young is the ignorance of what life has in store for you (i.e. bills, taxes, etc.) However, if you happened to completely ignore the repercussions of ruining your credit score, it will haunt you well into your adult life. Kind of like that impulse tattoo on Spring Break.

Lucky for you, our finance team at Pick the Payment has solid advice for all of you 20 Something’s. We’ve been through it all and have the financial know-how to keep your credit score up and provide an excellent fiscal foundation for your future. Because after all, it is your foundation. A lot of credit mistakes at 25 will make it extremely difficult to get a loan at 30. Or even 26. These mistakes just don’t “go away”. The best way to avoid them? Follow these simple rules laid out by our Pick the Payment advisors:

Rule #1: Always Pay on Time

Late payments don’t just reflect irresponsibility; they can cost you money too. Late fees range by loan, but paying an extra $10 or $20 can quickly add up over time. A history of late payments isn’t exactly what a potential creditor wants to see, and it will have a drastic effect on your credit score. Write down your due dates on a calendar and send payments accordingly.

Rule #2: Pay More than the Minimum Payment

The amount you pay is just as important as when you pay. If you’re putting over $100 a month on your card, paying the $20 minimum is digging yourself into $80 worth of debt per month. Multiply that by a year and you’re looking at almost $1,000 of new debt. From one card. The “responsible feeling” of making a payment isn’t just sending the minimum. Lower your principal balance and avoid paying high interest by putting less on the card and paying more every month.

Rule #3: Avoid Department Store Cards

Everyone has been there: “Would you like to save 20% on your purchase today by opening an Xstore credit account?” The $14 you saved that day is not worth the high interest and constant money pit a department store card truly is. If you go into a store with cash, you’ll only get the one pair of jeans you came for. When you have the Xstore’s credit card, the “why not?” mentality takes over and you buy three shirts, a jacket, and some socks. Then a month later you don’t feel like paying for them and the cycle begins.

Rule #4 Watch Your Income – Spending Ratio

It’s easy to overspend in your 20’s because there are so many things you haven’t tried yet. But if you want to eliminate the stress of debt and credit woes, manage how much you make a week and how much you can spend. It’s that easy. This much goes to rent, this much to food, this much goes to credit cards, etc. Getting your 3rd, 4th, and 5th credit card for “extra money” is not the answer because you’re spending money you don’t have. You will have to repay it all one day, and your 30-year-old self does not want to pay for fun you had five years ago.

There is no better time to start cleaning up your credit than right now. If you happen to need more advice or would like assistance with a car loan today, contact our Pick the Payment loan specialists. Your 20’s are meant to be a great time in your life; make them even greater by paying attention to your credit.