Becoming an adult is a gradual process. There isn’t just one single moment that you think ‘This is it, I’ve left my adolescence behind!’. There are a number of moments, from leaving school, graduating University, holding that first full time job in a career you have chosen, settling down with a partner, applying for a mortgage. Each person is different too, with every life a different story into adulthood. One thing that remains constant in the modern world however, is the debt that we’d all like to move away from.
As you do phase into adulthood it can be difficult to achieve everything that you want to if you are tied down with personal debt or bad credit. If you wish to apply for a mortgage it is unlikely you’ll be successful with a bad credit score. The same if you wish to apply for a car or a loan. It takes time to move away from a poor credit history but it is achievable.
One thing you can do is to take out low-level credit cards and store cards, or short-term payday loans that provide you with the opportunity to pay back on time each month. In these cases it is only prudent to take on the challenge if you can guarantee that you can pay back the monthly amount, or full balance. If not, you are just going to add another debt to the list. Showing that you are capable of making regular repayments, without missing a date or being late, will stand you in good stead when it comes time to apply for a much larger credit, such as a long-term, high-value mortgage in the future.
Before coming up with any plan you should first look to your credit report. You are entitled to acquire a free copy of your current credit file from one of the primary credit bureaus. Whether you use Experian, Equifax or TransUnion is up to you, but you can methodically check the file to see if there are any mistakes present that could jeopardise your score, and alert the relevant people if you do find some.
Pay Off Your Bills – This might sound straightforward but it is important to catch up on any bills that you have either missed payments for or are regularly late in paying. Making a strict budget will help you to work out exactly how much you need at certain parts of the month and allow you to catch up with your current credit repayment obligations.
Set a Budget and Stick to It – This is important for any adult, but especially if you are trying to build good credit. If you know exactly how much is going out of your account each month, and the dates and precise numbers for your credit repayments you can build a picture of how to get out of debt and how to build a good credit score over the coming months and years.
As you can see there is a quite straightforward approach to building a good credit score and coming out of debt as you move into adulthood. If you stick to these simple principles you won’t go far wrong.