Top 10 credit score tips for 20-somethings. Avoid debt build credit.

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Top 10 credit tips for 20-somethings

Top 10 credit score tips for 20-somethings

If I could relive my twenties again I would manage my credit differently, starting with listening to my mom’s advice about money. I wish I had learned more about my credit score. It would have really helped me out with my car purchase, my first home and the hefty interest rate I am paying.

Over the years I’ve learned from my mistakes and I want to help you avoid making the same mistakes. Get set up for a brighter financial future with these 10 tips.


  1.     The higher your score the better.

Credit scores range anywhere from 300-900. Aim to be  in the 700+ range. A higher score tells credit issuers you're not a risk to lend to. Get your score today.

  1.     Credit reports are different than credit scores.

Your credit score is derived from the information on your credit report.  The credit report shows the following:  your credit history; your credit usage, products you have and the limits and balanced owed. This entire information combined ends up making up your credit score.

  1.     You have two scores.

It’s a bit confusing having two credit scores and that's because two major credit bureaus exist which report on your credit score separately. Therefore, everyone has two separate scores and reports. The two major credit bureaus are: Equifax and TransUnion. These credit bureaus report differently on credit scores yet, you don’t need to worry about the differences.

  1. Maxing out your credit cards will damage your score.

Maxing out your credit card can be dangerous depending on the limit on your card.  If you’re maxing out your credit card it means you’re not paying your card off monthly. Furthermore, it means that your credit usage is much higher than your cash use.

Keep your balance on your card on the lower end around 30 percent utilization and pay your bill in full each month if possible.

  1.     Greater benefits than securing a credit card or a loan

When you’re in your twenties you’re probably only thinking about getting a credit card and securing a loan. As you age your life will evolve and your aspirations may include a house, marriage, children, a boat, vacation home, travelling and more.

A healthy credit score will help you build credit and save thousands of dollars throughout your life. Saving money on interest rates, lower insurance premiums and so much more.

  1.    Bad credit doesn’t have to stay with you for life.

Your credit score is only a snapshot of your current credit situation and it fluctuates as your credit changes. As your saving and spending habits evolve so will your credit and that’s why it’s recommended to check your credit at a minimum annually. Here are more advantages on why it’s a good idea to have a tight pulse on your credit score so that you can you safely build credit.

  1.   Don't build debt.

It’s a common misconception that you have to have debt in order to have a credit score. As a matter of fact you can be penalized for having debt. The best way to build credit is to grow it slowly and safely. Pay your balance in full to safely grow your credit without taking on a lot of debt.

  1.    Pay more than your minimum payment.

If you’re in the habit of paying only your minimum payment let’s work on changing your habit. Making a minimum payment is the most expensive and also the longest way to pay off debt. Most credit cards charge a high interest rate on money owed making your borrowing cost expensive.

  1.    Use your credit card to build credit history.

Having a credit card and using it monthly is the easiest way to establish a credit history. We don’t recommend using your card and keeping a running credit card balance long term.  Instead be smart by keeping track of your spend and pay your balance each month.

  1.  There is good debt and bad debt.

Having debt on a home or a car isn’t considered bad debt and these are necessities to live and complete our day to day activities. Having a mortgage and a car loan are considered good debt as long as you can stay on top of your payments.

Examples of bad debt are the costly high interest credit card debt and outstanding students loans.

For more reading on 6 unexpected ways your credit affects your life read this great blog by one our partners greedy rates.


Refresh financial offers custom credit building solutions to help you build your credit score FAST.


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    What Canadians are saying about Refresh

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