How to build credit when you’re just getting started

By Marcia Lerner Posted: 04/29/19 Updated: 07/03/19

After you finish high school or college, when you’re developing your financial independence, you’ll probably have several essentials on your to-do list: find a job, rent an apartment, maybe buy a car. But one often-overlooked item can be a prerequisite to all of the others: Establish good credit. As you get your life together, landlords and potential employers are likely to review your credit report, and lenders will check your credit score.

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Kevin Laskey, a graduate student in Philadelphia, was pleasantly surprised when the subject came up during his search for an apartment. “I had to do a credit application,” says Laskey, who discovered he’d built a strong credit score by paying his bills on time.

But that’s the point: If you want a good credit score, you have to earn it, says Josh Palmer, the Executive Director and Head of JPMorgan Goals-Based Advisory and Support.

Here are some steps that can help you get there.

Know your financial terms

Three major credit bureaus (Experian, Equifax and TransUnion) track your credit history, which is used to calculate your credit score. VantageScore, a score developed by the three major bureaus, considers the following six factors:

  1. Payment history
  2. Credit age and types of credit
  3. Percent of your credit that you use
  4. Total balances
  5. Recent credit behavior and applications
  6. Available credit

VantageScores run from 300 to 850, and a score of 720 or higher is very good.

Take steps to establish good credit

You may hope to have a perfect score right off the bat, but that seldom happens, says Todd Friedhaber, a certified financial counselor for Cambridge Credit Counseling Corporation, based in Agawam, Massachusetts. “Most young adults start with no credit at all,” he says.

Begin establishing your financial identity by opening a basic checking and savings account at a solid institution, advises Palmer. Although your checking and savings accounts won’t factor into your credit score, they’re the basic building blocks of your financial framework, enabling you to do everything from depositing your paycheck to paying your bills—which will help you build a strong credit score.

Paying utility bills on time can be a great way of building your credit history, says Friedhaber, because some utility companies report customer behavior to credit bureaus. Keep a record, especially if you lack other evidence of your creditworthiness. Or you could buy on layaway, as making timely payments will testify to your reliability. Paying your student loans on time can also help build your credit score.

You might also consider asking your parents to add you as an authorized user on one of their cards, suggests Palmer. You’ll be able to use the card, and in some cases the credit history of the account will appear on your credit report.

Polishing up your score

According to VantageScore, being 60 days late on a payment can drop your score by 100 points or more, so it’s vital to make on time payments for each of your accounts. Setting up automatic payments or alerts can help you remember to pay on time each month.

And don’t be discouraged if your credit score isn’t where you want it to be. Most credit histories go back only seven years, and even within that time frame, Friedhaber says, “what you do today has greater weight than older events.””Checking your credit score yourself does not impact the score, so check it regularly to stay on top of your credit health.”

Pam Codispoti, Head of Consumer Branch Banking at JPMorgan Chase Bank

Avoid credit surprises

Many online tools let you keep tabs on your credit score. Contrary to what you may have heard, there’s no harm in looking it up regularly. “Checking your credit score yourself does not impact the score,” says Pam Codispoti, Head of Consumer Branch Banking at JPMorgan Chase Bank. “So check it regularly to stay on top of your credit health.”

Laskey has followed that advice, signing up with his credit card company to monitor his score. “I don’t check it religiously, but I take a peek if I’m online,” he says. “It’s something I’m careful about.”

Keeping your credit score up is just one part of defining who you are financially during your first years on your own. But good credit can have a snowball effect, helping you move toward long-term financial goals—whether it’s starting your own business, buying a home, or just having a big, exciting vacation. Whatever your objective, says Palmer, having a positive credit history can help you get the best interest rates and cement your reputation as a reliable, creditworthy adult.



How Quickly You Can Wipe Out Your Car Loan With an Extra $25 Per Week

Paying off your car loan can seem like an expensive, lengthy process, but there are ways to chip away at your debt and decrease the amount of time it will take you to pay it off.

Let’s say you take out the amount most new car owners do and then pay the average minimum on that. You’d be paying $551 per month on a loan of $32,187 at an average interest rate of 6.19 percent. That means you’ll pay off your car loan debt in 70 months, or a little under six years, and pay $6,214 in interest.

If you increase your payment by $25 per week, or $100 per month, and pay $651 instead of $551 at the same interest rate, you could decrease your repayment period by a full year. You’d also save $1,147 in interest.

Even if you devote an extra $25 per month, so you pay $576 instead of $551, you could shave three months off of your repayment period and pay $334 less in interest.

Here are three ways to help you pay off your car loan faster:

1. Make biweekly payments

For 33-year-old David Entenza of North Bergen, New Jersey, paying half of his monthly car loan payment every two weeks made a big difference. Paying on a biweekly schedule allowed him not only to meet his minimum for a given month but also let him work ahead and pay down more of his principal.

Instead of making 12 payments over a year of $377, his minimum, in an average year, he would make 26 biweekly payments of at least $188.50. That’s a total of $4,901 a year instead of $4,524 (or one extra payment), meaning he was able to put more toward his principal.

2. Side hustle your way to extra money toward your principal

Entenza also put extra income from his tax returns and his side hustles toward his car payment. Handy work and shoveling snow during the winter contributed an extra $100-$200 per month.

By making biweekly payments and scraping together extra income, Entenza wiped out roughly $20,000 worth of auto loan debt he’d accrued for his 2012 Toyota Corolla between 2012 and 2015, cutting his repayment time down by approximately two years.

3. Ask for a payoff deal

If you’ve made consistent progress on paying off your loan, your lender may even feel inclined to make you a payoff deal, which is a quote for a one-time installment payment, plus interest, to pay off any remaining debt.

“If you are close to the end of the loan and you feel like you’re able to pay it off in one installment, it’s definitely worth giving [your lender] a phone call to calculate a payoff number for you,” says Ronald Montoya, senior consumer advice editor for Edmunds. “They might be able to reduce the interest rate and give you a payoff amount so you can be done with the loan.”

By Ivana Pino

Ivana Pino is a writer at Acorns + CNBC. Previously, she interned at NBCUniversal’s in-house advertising agency as a bilingual writer.



How an Extra $25/Week Can Get You Out of Student Loan Debt Faster

Putting an extra $25 a week toward your student loan balance can help you pay off your debt much faster—and save you money in the long run.

Let’s say you have $37,172 in student loan debt, the average balance for 2016 college grads. Rates vary from loan to loan, and depend on what kind of loans you have and when you borrowed that money. But for this example, we’ll estimate about 5 percent on the combined balance over four years. (That’s close to the 5.05% interest rate on federal student loans for undergraduates for the 2018-2019 year.) If you stick with the standard 10-year repayment plan for federal loans, you’ll pay roughly $395 a month for the next 120 months.

However, with just an extra $25 per week—so, about $495 a month instead of $395—you would cut down your repayment time by 29 months and pay off your full loan in a little more than 7.5 years. You’d also cut the amount of interest you paid by almost $4,000!

“If you can’t afford an extra $20, even an extra $5 can make a difference,” says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors (TISLA).

“Assuming your goal is to pay off your loan as quickly as possible, every extra dollar you spend is going to reduce the…interest accruing and more of your payment will be going toward your principal next month.”

How to Find That Extra $25 a Week

Kiera Carter, who is 30 and lives in Los Angeles, paid off her $111,000 student loan debt in just under nine years, saving a few thousand dollars by eliminating her debts two to three years ahead of schedule. In addition to juggling a full-time job and several side hustles, she became more conscious about how she spent her money and trimmed her budget significantly.

“I still went out and had fun with my friends. I just tried to have more of a say in where we went and looked for places where I didn’t have to spend a lot of money to have fun,” says Carter. She chose BYOB restaurants with affordable specials and brought $3 dollar bottles of wine.

Carter also cut her clothing budget by purchasing affordable staples for her wardrobe that would last instead of designer clothes. To supplement her income, Carter took on freelance writing gigs, plus an extra job as a weekend lifeguard, to help chip away at her loans. “That extra money was really crucial,” she says.

After all, it’s often the small changes that make the biggest difference in the long run.


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By Ivana Pino

Ivana Pino is a writer at CNBC + Acorns. Previously, she interned at NBCUniversal’s in-house advertising agency as a bilingual writer.

3 Fitness Tips You Can Use to Get in Better Financial Shape

Some of the same strategies that can help you improve your health can also help with your finances.

“I remember a client saying to me, ‘I don’t understand money but I’ve trained for a marathon, so I get this,’” says Shannon McLay, founder of New York’s Financial Gym, a financial advice firm that takes a fitness-inspired approach.

These three fitness tips can help you crush your financial goals:

1. Set specific, exciting goals.

Nicole Hulley, a certified fitness trainer at Equinox Greenwich Avenue in New York, says she encourages clients to get specific with their goals and to focus on ones they’re excited to hit. A client focused on having more energy to play with his kids, for example, will be more inspired than one with the vague goal of “getting healthy.”

Similarly, don’t just tell yourself to put away more money. Set an amount you want to save and decide what you’re energized to save for. It could be an emergency fund to help you get by if you lose your job, or it could be a trip to Tahiti. Or both!

2. Replace ‘I can’t have’ with ‘I will have.’

When prioritizing fitness, you often have to make sacrifices: You may adjust your sleep schedule to get to the gym or scale back on sweets. Instead of focusing on that loss of freedom, trainers encourage clients to think about the positive effects they see (do your arms look stronger?) and are working toward (hello, six-pack).

That mind-set works well for staying on track with financial goals, too. Think not about what you’re losing but on what you hope to gain. “It’s not like, ‘I can’t go out because I’m depriving myself.’ It’s ‘I can’t go out because I’m going to Italy this summer,’” McLay says.

3. Start small.

Making progress takes time, and it’s easy to get frustrated when you don’t see dramatic results. Breaking down your grand plans into smaller steps, and then tracking your progress, can help keep your confidence up because you can see what you’re accomplishing. Sometimes people come to the gym for only 15 minutes at a time, and that’s still a win because they’re making fitness a part of their routine.

Address your financial goals, like paying off debt, the same way: by starting with small steps that can become small victories. “My wife and I used a whiteboard to visualize our student loan debt,” says certified public accountant David Almonte, a member of the AICPA Financial Literacy Commission. When they updated it every month, they were able to see and celebrate their progress.

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Should You Pay Off Debt Before You Start Investing?

Paying off debt and starting to invest for the future are two of the most common money goals—and the sooner you can do both, the better. But should you pay off debt before investing or is it ever okay to prioritize investing?

If you suspected the real answer is “it depends,” you’d be right. It all comes down to compounding, the way our money grows when we invest—but can come back to bite us when we take on debt.

What’s compounding again?

Compounding is when your money generates returns, which then generate returns of their own—meaning, over time, you can earn more and more.

For example, if you invested $100 and got a 10-percent return ($10), your new total of $110 would be the base of future returns. If you earned a 10-percent return the next year, you’d get $11, or $1 more than you got the first year.

So I should invest right away to take advantage of compounding?

That depends on your individual financial situation. While compounding can help you when you invest, it can also hurt you when it comes to any debt you may have. Just as investing returns grow over time thanks to compounding, so too does the interest on debt. In the long run, we may end up paying much more than the value we borrowed.

Over time, investments may grow your money more than any debt with lower interest rates may increase.

If I have any debt, should I invest then?

Consider the kinds of debt you have. Credit card debt is generally the most expensive form, making it a huge barrier to building wealth. Interest rates vary significantly based on factors like your credit score and lender, but the average for new cards sat at a record high of 17.67 percent in early April 2019. Privately held student loan debt isn’t far behind, averaging 12 percent or more.

Other forms of debt, like mortgages and federal student loans, however, have substantially lower average interest rates of about 5 percent each.

Over the long term, stocks have returned an average of about 10 percent annually. Over time, investments may grow your money more than any debt with lower interest rates may increase.

What’s that mean for me?

If you have low-interest debt it might make sense for you to make your minimum payment and invest any extra money you have. Your investments may earn you more money than you might end up spending on debt interest.

But with high-interest debt, like privately held student loans and credit card debt, it may make more sense to pay off your balances first before you start investing. You want compounding to work for you, not against you.

There may be one exception to consider, though. If your company matches a portion of your retirement contributions, it’s wise to invest at least enough to get the match they’re offering. That’s basically free money.


Spring Side Gigs to Start Gearing Up for Now

Whether you’re doubling-down on a big money goal or just want some extra cash in your budget for summer fun, now’s the perfect time to figure out how to earn more money over the next few months.

Luckily, spring offers a ton of side job opportunities. Here are some top side gigs to consider—plus how to start ramping up now.

1. Work the party circuit.

From graduation celebrations to wedding showers for summer brides and Memorial Day barbeques, spring is the season for partying. This makes it a great time to kickstart any event planning, catering or baking business you’ve been thinking about—or find a gig helping out established companies.

According to Payscale and, catering chefs earn an average of about $15 an hour, and event planners can earn around $30—but you can set your own fees, based on what your market and desired clientele can handle.

Start planning now: If you’re starting a home catering business, you may need a food handlers permit; most states offer online courses. Beyond that, work on advertising your services in late March and April on sites like TaskRabbit and ThumbTack, as well as local Facebook and Nextdoor pages. If you’re prefer to be an extra set of hands for caterers and event planners, start reaching out to local companies or scan listings on Indeed and ZipRecruiter.

2. Pretty up spring-flingers.

Proms are usually scheduled around the same time, so snagging a salon or makeup appointment can be tough for party-goers. Enter: a traveling glam squad, courtesy of you.

Start planning now: Your window here is short—maybe just six Saturdays in April and May, so move quickly. In March, find a few willing friends to serve as models for an online lookbook on your own website or Instagram and Facebook profiles. Not only will this showcase your skills to potential clients, but it’s smart to practice some on-trend looks to make sure you have the technique down and get a rough idea of how long it takes to finish an updo or smokey eye.

If you’re setting your own prices with friends and neighbors, consider pricing per job—say, at least $40 for hair and makeup. If your skills are pro level, apply for work through on-demand beauty apps like beGlammed or GlamSquad.

3. Roll out the welcome mat for tourists.

Do you live in a destination people flock to for spring break? Rather than huff over the crowds congregating near your favorite restaurants, get those tourists to spend some of their vacation budgets with you.

Start planning now: Check out local tour services, like ToursByLocals or Vayable, looking for local experts; sign up to plan a local “experience” through Airbnb; or host visitors in your home. You can charge top dollar during peak vacation season. For even less effort, you can accompany visitors to local museums or restaurants as a RentAFriend. If you can get over the awkwardness, you can expect at least $10 an hour.

And don’t forget rideshare apps like Uber or Lyft. In a week or less, you can have your approval and be ready to drive. Earnest reports drivers earn more than $350 per month on both apps.

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4. Clean up by cleaning out.

You know what “sparks joy”? Making cold, hard cash from castoffs. After spring cleaning your own home and selling any unwanted items, get paid for helping others do the same.

You can start a professional organizing business—average professional rates run from $30 to 80 an hour—or help time-strapped people sell their best items, while taking a cut for yourself. Considering consignment stores take 50 percent, you’d be smart to slash your rate to 30 percent or less to stay competitive.

Start planning now: Offer your services now while Marie Kondo is still trending by advertising on local social media platforms, putting flyers on community bulletin boards and, if you’re going the professional organizer route, creating your own website with some before-and-after photos.

For lawn care, you can make up to $35 to $50 per job, according to Angie’s List.

5. Make some green from your green thumb.

Many people want a lovely garden, but not everyone digs putting in the work. If you’ve got a green thumb, help homeowners plan their plots with pretty flowers or veggies and herbs. You can also offer to mow lows, weed, clean up brush, trim trees and other lawn care tasks.

Start planning now: Pick a neighborhood and create a clever marketing gift to drop on doorsteps, maybe just a few seeds taped to a flyer, along with your number. You also could contact local garden clubs to see if they ever get requests for services they can’t fulfill. And reach out to local nurseries—if they don’t have their own “labor,” they might be willing to market your services in exchange for purchasing their plants for all of your clients’ gardens.

For lawn care, you can make up to $35 to $50 per job, according to Angie’s List.

6. Work at sporting events.

Like to call balls and strikes? The demand for umpires is high during the spring for baseball and softball leagues, and you can usually score either mid-week evening games or weekend tournaments. Youth league umpires can make $15 to $30 per game, reports one umpiring site.

You may also be able to work at minor league ballparks, taking tickets, selling concessions or ushering fans to their seat, usually for minimum wage—but sometimes getting tickets to games you aren’t working as an extra perk.

Start planning now: It’s not too soon to contact your local parks and recreation department, as training often starts in the winter months. If you missed any necessary orientation classes, many leagues still have a need for umpires and often will offer specialized individual training.

What Is a Good Credit Score?

Whether you’re looking to get a new credit card, rate-shopping for auto loans or participating in a background check for a new job, you can expect your credit score to be checked at some point in your adult life.

But what is a credit score, and what does it tell people?

Credit is essentially the mechanism that allows us to spend money today with the understanding that we’ll pay it back later—so lenders, understandably, want some assurance that we’ll make good on those payments.

That’s where credit scores come in. This three-digit number, derived from the information on your credit report, provides lenders a snapshot of your creditworthiness (or trustworthiness to pay back that money). The higher your score, the more likely you are to get approved for whatever it is you’re applying for: a new credit card, the lowest interest rate possible on a loan or even an apartment lease.

So what is a good credit score, on a scale of 300 to 850? Here’s how FICO, the most common scoring model, breaks it down:

Exceptional: 800 to 850

Very good: 740 to 799

Good: 670 to 739

Fair: 580 to 669

Poor: 579 and under

Don’t fret if you’re not at 850. The vast majority of us aren’t—and it’s not necessary, anyway. According to FICO, the national average sits at 700, and anything in the “very good” range is likely to get you the best rates available on loans. (The lower the interest rate, the less it costs to pay that money back.) On the other hand, you’ll likely need a minimum score of about 680 to qualify for most mortgage lenders.

A number of factors determine your score. Here’s how FICO weighs each one:

Your payment history (35 percent): A history of making regular, on-time payments is the most important factor.

Amount of credit owed (30 percent): Your credit-utilization ratio (i.e., how much available credit you’re using compared to your limits) is another big one. If you must carry balances, Experian suggests keeping them below 30 percent of your total available credit.

Length of credit history (15 percent): Generally speaking, the longer your credit history, the better. If you’re new to the whole credit thing, work on nailing the other factors.

Credit mix (10 percent): How diverse are your open accounts? Responsibly managing a mix of credit lines, like credit cards, mortgages or student loans, makes up one-tenth of your score.

New credit (10 percent): From FICO’s point of view, opening multiple credit lines within a short time period is a red flag, particularly if you have a short credit history.

When it comes to improving your credit score, owning your information and regularly checking in on your progress is key to success.

When it comes to improving your credit score, owning your information and regularly checking in on your progress is key to success. You can pull your credit report from each of the three credit bureaus (Experian, TransUnion and Equifax) for free every year at

If you spot an error, be sure to report it as this should boost your score.




What’s the Difference Between Investing and Saving?

We often use the terms “saving” and “investing” interchangeably. After all, both refer to key habits you must practice in order to achieve financial success. But they’re not really the same.

Saving is setting money aside for (usually short-term) future use, separate from what you plan to spend right now. Investing is taking the money you’re saving and using it to purchase assets that you expect to pay returns over time—in other words, helping you grow your wealth.

How do you decide what money to save and what to invest?

First, you have to sort out your financial goals and determine your timelines for achieving them. Typically, you’d want to save money for goals you’d like to accomplish within a year or so. For anything that will take longer, you may be able to afford to invest the money.

Why does timeframe matter?

When you’re shooting to reach a goal soon, you want to be sure the money will be there when you need it—and saving offers the best change of that. The tradeoff for safety, though, is that money saved doesn’t tend to earn much while it sits. For example, even the highest yielding savings account right now offers a rate of just 2.39 percent, according to Bankrate. The average savings account comes with a rate of merely 0.10 percent, as of mid-January 2019. The upside: You can rest assured that the money you’ve put into the account will be there, whenever you need it.

Investing can generate greater returns—but with greater risk and ups and downs.

Investing can generate greater returns—but with greater risk and ups and downs. For example, aside from some rocky months in 2018, stocks have been on a tear in recent history—gaining 267 percent from March 2009 through December 2018. But in the last bear market (generally defined by a drop of 20 percent or more from the recent peak), the S&P 500 plummeted 56.8 percent between October 2007 and March 2009 before it began to recover.

Over the long term, though, the stock market has historically always gone up. Since its inception in 1928, the S&P has returned about 10 percent a year, on average. So if you have a long timeline for a particular financial goal, such as retirement, the idea is that there’s time to recover from the bumps along the way.

Plus, you can—and should—invest in more than just stocks, like bonds, real estate and, of course, cash. That way some of your holdings have a chance to increase even as others might drop, and investing can continue to help you meet your goals no matter what any one investment does.

And I have to save and invest?

If you want to be financially healthy. You need some savings on hand to at least cover yourself in an emergency. Most experts advise people to have three to six months’ worth of expenses squirreled away in an emergency fund. And even as you work to save for the short term, you also want to invest for the long term to maximize the time that money has to grow. The best chance to set yourself up financially is to get in the habit of consistently saving and investing.


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