051: Money Moves in your 20s

Tip #4 Begin building credit

Credit is your ability to take on debt, while debt is the actual amount that you currently owe to creditors. In general, you are in a much better financial position if your available credit far exceeds your current level of debt. Credit is the ability to borrow money, while debt is the result.

For young adults in their 20s, credit cards and student loans are the most typical form of debt. Credit card itself represents amount of credit you can borrow.

Do you have at least one credit card in place? I am not encouraging use of credit cards, however when used wisely, paid off monthly, it can be a great tool.

This will help you establish a track record of making payments on time, not maximizing available credit and building a history.

Credit Reports give us a report card that is important to maintain and monitor if you plan to borrow funds in the future.

I strongly recommend for you to pull your credit report, if you haven’t in the last 12 months. Sites such as creditkarma.com and myfico.com will provide your report. Also, each of the credit agencies: Equifax, Experian & TransUnion will provide you with a free report once a year.

 
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