Gen Z: It’s Time to Kickstart Your Credit Journey

Man on a bean bag holding credit card and laptop

Whether you are college bound or heading into the workforce, there is something all young adults need to know about: your credit score. Think of this three-number score as your financial GPA. It holds the keys to your dreams of owning a car, renting your first place, or even landing that dream job.

The best part? Laying the foundation for a great score requires minimum effort. The trick is to get started early. The following guide will highlight strategies to build your credit score and tips to keep your score favorable. It’s easier than you think and can tremendously impact your future self.

What is a Credit Score?

Your credit score is a financial snapshot of how well you manage credit. Lenders use this figure to quickly determine how responsible you are when handling money and how much risk is associated with lending money to you.

There are many different models and organizations that determine credit scores, with your FICO® Score being one of the most popular. For reference, we’ll focus on your FICO® Score throughout this article.

Credit scores range between 300 and 850 points, with 850 being the best. Five key components determine your score:

  • Payment History (35%) – How often do you make payments on time?
  • Amount Owed (30%) – How much debt do you currently have?
  • Length of Credit History (15%) – How long have you demonstrated you can manage credit?
  • Mix of Credit Types (10%) – How well do you manage different types of credit?
  • New Credit (10%) – How often do you apply for new credit?

Each of these components will benefit from time. So, the sooner you begin working to establish your credit history, the better. It’s also important to note that nowhere on your credit report is your income displayed. That means you can begin building credit even if you’re a full-time student with limited income.

Benefits of a Good Credit Score

An excellent credit score can unlock a slew of financial perks that you don’t want to miss out on.

  • Easier Approvals: Whether you’re ready to buy a new car or your first home, a great score makes getting approved much easier and faster. It provides peace of mind knowing you’ll have access to loans when the time comes.
  • Lower Rates: Lenders typically use credit scores to price loans. That means the better your score, the less interest you’ll pay. An excellent score can save you hundreds or even thousands of dollars annually, depending on the amount borrowed and the type of loan.
  • Fee Waivers: Many businesses, such as utility companies, will often waive set-up fees or deposits if you have a favorable credit score.
  • Apartment Rentals: Most landlords will pull your credit when you apply to lease an apartment. So, whether you’re setting out on your own or you plan to live off campus at school, a good score will work to your advantage.
  • Job Opportunities: Some employers will review applicants’ credit as part of their hiring process. Maintaining an exceptional score could help land your future dream job.

A Simple Recipe to Start Building Your Credit Score

Opening and responsibly using a credit card is one of the easiest strategies for building your credit score initially. Young people often worry about credit cards and the potential for overspending. While this is a common concern, we’ll provide options to limit your exposure to higher debt levels. But first, let’s review a simple recipe to boost your score with a credit card.

  • Step #1: Make a small purchase with your credit card monthly. For example, buy a quick lunch or fill your car with gas.
  • Step #2: Repay the entire balance before your credit card payment is due.
  • Step #3: Rinse and repeat each month.

It’s that simple. This formula keeps your credit card and credit history active, provides on-time payments, and maintains a low-to-zero-dollar balance. The longer you repeat this cycle responsibly, the better your score will become.

Overcoming the Temptation of Credit Cards

If you’re worried about overspending with a credit card, there are options to put your mind at ease.

  • Open a Secured Credit Card

A secured credit card functions the same as a traditional (unsecured) credit card. The main difference is that you put a deposit down with the card. For example, if you apply for a $500 secured credit card, you will give your lender $500 to hold for you. Then, you’ll use the credit card as usual. If you cannot repay your outstanding balance, your lender will use your deposit to pay off the balance and prevent negative marks on your credit report.

  • Become an Authorized User

Another option is to ask your parents to add you as an authorized user on their credit card. With this tactic, you’ll receive a credit card tied to your parent’s account. Any purchases you make will become their financial responsibility to repay. So, you don’t want to spend frivolously. When they make their monthly payment on time, you’ll also receive credit. It’s important to note that you only want to do this strategy if you know your parents manage their credit cards responsibly.

  • Restrict Your Credit Card Limit

When applying for your first credit card, you can request a lower credit limit. This strategy will ensure that you don’t get over your head with a debt level that is difficult to repay – especially if you’re a full-time student with minimal income.

We’re Here to Help!

An exceptional credit score can open the door to many financial opportunities. And it’s easier to obtain than most people realize. All it takes is time, dedication, and smart money management.

If you’re ready to open your first credit card or would like to learn how a secured credit card works, we’re prepared to help. Please stop by any of our convenient branch locations or call 888-777-9982 to speak with a team member today.


  • This credit union is federally insured by the National Credit Union Administration.

  • Equal Housing Lender

You might like ...

Here are a few other resources you might enjoy.

woman at the beach with a floatie

Unlock Your Dream Summer with a HELOC

Summertime is synonymous with fun, relaxation, and making memories. Whether you’re taking an adventure-filled family vacation, hosting epic backyard barbecues, or embarking on spontaneous road...

Read more