How to Build Credit in Your Teens and Twenties

Your credit score is one of the most powerful numbers in your financial life, and the earlier you start building it, the better. A strong credit history can help you qualify for lower interest rates on a car loan, get approved for an apartment, and even influence job applications in some industries. The good news? You don't need to start with a perfect score. Here's what you need to know about building credit responsibly in your teens and twenties.

1. What is a Credit Score?

A credit score is a three-digit number (typically 300–850) that tells lenders how reliably you manage debt. Five factors drive the number: payment history (35%), credit utilization (30%), length of credit history (15%), credit mix (10%), and new credit (10%). Understanding these factors helps you make smarter decisions from the start.

It’s best to have a credit score that is at least 600 or higher. The VantageScore® model lists scores from 600-660 as fair, while anything below that (300-599) is considered poor. Excellent scores are 748-850, while very good and good scores are 716-747 and 661-715, respectively. As you make on-time payments and establish credit, you should see your score increase over time.

With American Heritage Credit Union, you can check your credit score in the Mobile Teller app by opting into our credit score service. This is a free service, and you can enroll within Mobile Teller. Once you’ve opted in, you’ll be able to see your credit score each time you log in to Mobile Teller. Learn more here.

2. Ways to Build Credit When You're Young

Credit cards immediately come to mind when you think of building and maintaining credit. But they aren’t your only option. If you don’t think a credit card is a great fit for you now, here are some other simple ways you can work on building your credit:

• Consider a credit-builder loan. With this loan, the funds are stored in a savings account, and you make payments on them over time. This helps you build credit, and the funds are released to you once it's paid off.
• Make student loan payments on time.

• Report recurring bills, such as rent, utilities, phone payments, and more. You may want to enroll in a rent-reporting service if your landlord doesn't already report to a credit bureau.

You may also want to think about becoming an authorized user on a parent or guardian's credit card. This provides you with your own credit card tied to their account and allows you to make purchases. Plus, their on-time payments will also help you build your own credit!

3. Smart Habits That Make the Biggest Difference

Building strong credit starts with a few key behaviors. These have the biggest impact on your credit score:

• Always pay on time. Set up automatic payments so you never miss one.
• Keep utilization under 30%. If your limit is $500, aim to keep your balance under $150.
• Do not close old accounts. Length of credit history matters. Keep older accounts open, even if you don't use them regularly.
• Limit hard inquiries. Each new credit application is recorded. Apply thoughtfully.

• Monitor your credit regularly. Checking your own credit doesn't hurt your score and helps you catch errors early.

4. Common Credit Mistakes to Avoid

A few missteps can undo months of good habits. Watch out for these:

• Maxing out your card. High utilization signals risk to lenders, even if you pay it off every month.
• Opening too many accounts at once. Multiple applications in a short period can temporarily drag your score down.
• Ignoring your credit report. Errors happen. An incorrect late payment or account you don't recognize can hurt your score through no fault of your own.

• Closing your first credit card. Your oldest account contributes to the length of your credit history. Keep it open.

5. Tools That Help You Start

Building credit requires having credit—these starter options are designed for people with little or no history:

• A secured credit card. You provide a refundable deposit that becomes your limit, then build history with regular use and on-time payments.
• A student credit card. This type of card is built for those with limited credit histories, often with lower limits that keep spending manageable.

• Becoming an authorized user. A parent or guardian adds you to their card, and their payment history can help build yours.

6. Early Credit Options with American Heritage Credit Union

American Heritage offers members options to build credit and establish their credit history. This includes its Platinum Secured Mastercard, which allows you to determine your credit limit based on funds you’ve already saved. You can deposit funds in the amount of your choosing, ranging from $300 to $25,000.

The Platinum Secured Mastercard comes with additional features as well, such as Scorecard Rewards. You can earn one Scorecard Reward Point for every $1 you spend with this product. Plus, American Heritage donates a penny to the Kids-N-Hope Foundation for every purchase you make courtesy of its Penny-A-Purchase Program.

Learn more and apply for the Platinum Secured Mastercard today here.