By Chloe Savan
Brody Humphries, a third-year college student, started building his credit during his senior year of high school. Now, at 21 years old, he can report an excellent credit score of 782.
Humphries, an anatomy major at Dallas College in Texas, said starting to build his credit early was the best financial choice he has made.
“The big thing with credit scores is just time for it to build based off of you doing the right things. You can’t start building your credit score today and expect it to be perfect by tomorrow,” Humphries said. “It takes years and years and years, and so every little bit helps.”
Amanda Selby, communications coordinator at Robins Financial Credit Union, and Joseph Goetz, a financial planning professor at the University of Georgia, both suggested opening a personal credit card is important when starting to build credit.
“You don’t have to carry a balance — simply just having a card in and of itself will improve your credit score,” said Goetz.
Selby added, “I know credit can be a little scary sometimes when you're just starting out, but having some kind of credit account in your name is going to be the best way that you can go ahead and start building that credit history.”
Equifax, one of the three nationwide credit reporting agencies, explained on its website that credit scores are based on a consumer’s credit history and play a role in loan applications. Scores typically range from 300 to 850; the higher an individual’s score, the more likely an individual is to secure a loan.
From a lender’s perspective, a higher credit score suggests a lower risk involved in issuing a loan. A lower credit score suggests just the opposite, and loan applicants with low credit scores may face higher interest rates if they secure a loan at all.
In an article on its website titled “How your score is calculated,” Wells Fargo explained that credit scores consider payment history, how much is owed on loans and credit cards, the length of credit history, the types of accounts outstanding and recent credit activity. In an article for Forbes Advisor titled “What Makes Up Your Credit Score,” contributor Michelle Black said making payments on time and keeping a low credit utilization rate — that is, the ratio of the credit card balance to the credit card limit — can make up 65% of a credit score.
AnnualCreditReport.com, the official site for requesting credit reports, said “federal law requires each of the three nationwide consumer credit reporting companies — Equifax, Experian and TransUnion — to give you a free credit report every 12 months if you ask for it.” AnnualCreditReport.com is owned by Central Source, LLC, which is sponsored by Equifax, Experian and TransUnion.
Goetz recommended using credit monitoring tools like CreditKarma to keep track of credit scores and stressed the importance of starting to build credit as early as possible.
“Simply making payments on time and keeping your credit utilization ratio low, that improves your credit. Having a student loan improves your credit. So, it’s just a matter of time,” said Goetz.
Humphries said he maintains his credit score by paying his monthly credit card bill on time. He has an autopayment safety net set up to ensure he never misses a payment.
“You’re trying to build up failsafes as well…that way you can’t mess up your own credit score unless you really try hard,” said Humphries.
Chloe Savan is a journalism student at the University of Georgia