When you are starting out on your own is like a new adventure.

Many young adults are not taught to manage their finances and credit before going out on their own.

I came across an article to help young adults and adults alike avoid mistakes with their credit.

"Money mistakes when you're just starting out can trash your credit score, saddling you with bad credit and making goals harder to meet".

Source MSN Money- 5 ways young adults ruin their credit 

The 5 ways to ruin your credit:

1. Charge it to the max 

A new credit limit may feel like free money to spend.

Spending more than 30% of your limit can hurt your credit.

Lenders look at debt to credit ratio.

When your max out one or more of your credit cards lenders may consider you to be a risk.

2. Missing due dates will ruin your credit.

Your credit card payments may take a back seat to your rent, utilities, and student loans if you are struggling to meet those obligations.

However, missing payments can lower your credit score.

Make sure that you pay the minimum payment.

The payment also needs to be on time.

If you are struggling with your finances look for ways to cut expenses and increase your income.

3. Co-signing for a loan can ruin your credit.

Your boyfriend or girlfriend may be denied credit for a car loan.

The dealerships finance department tells them that they can only purchase the car with a co-signer.

You must look at the big picture.

He or she may make all the payments.

He or she may walk away from the loan.

This happened to me with a cell phone.

After our break up he stopped paying the bill.

I didn't find out until the bill went to collection.

Just say no.  It will save you from harassing phone calls.

You will avoid taking on additional debt.

Your credit score will not be affected.

If he or she gets upset then he or she may not really be your soul mate.

4. Collecting credit cards like Beanie Babies will ruin your credit.

Each time you enter a store you are offered the chance to save 10% when you open up a new account.

The appeal for the instant savings can be great.

The credit cards that you have the more potential debt that you have available to you.

Having to many credit cards can ruin your credit score.

Keep as few credit cards as possible.

I recommend to my clients to have one Visa or MasterCard and one favorite store card.

Your favorite store will have a smaller limit keeping you from racking up a large amount of debt.

5. Blowing off your other bills will ruin your credit.

Each bill that you are responsible for can shape your credit score.

Even if your utilites  for example are not on your credit report they still need to be paid on time.

Some utility companies are moving to report your payment history to the credit bureaus.

The article says that you should set up automatic payments from your bank account.

I would not recommend this if you have a problem managing your finances.

You can setup alerts on your account to send emails to remind you that a bill is due.

The most important thing you can do as a young adult when you are building your credit history is to pay your bills on time.

You want to make this a habit that you always keep.

Avoid charging on your credit cards if you can not pay off  the bill when it comes.

Don't carry around your credit cards.

This can tempt you into unnecessary debt.

Not only can young adults benefit from this article.

Anyone looking to restore or rebuild their credit needs to avoid the 5 ways to ruin your credit.

Your financial coach,

Renee Lawson
 

Recommended Resources:

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