Creditworthiness: The early bird gets the worm

No matter where they finish, the competitors in Dupaco’s Great Credit Race are all winners.

Really.

OK, so only one racer will walk away with the $500 grand prize for building the highest credit score. But by signing on to this six-month race and getting their first Visa credit card, all of these young racers took an important first step in establishing good credit early, said Jill Rothenberger, the racers’ credit coach.

“It’s so important to get a credit card with your local credit union right off the bat when you turn 18,” Dupaco’s Rothenberger said. “It can take you a good six months to a year to develop a credit score.”

Establishing solid credit can help you buy a home, get a job or even get a decent rate on car insurance.

“If they don’t have any credit established and they go to get an apartment, some utility companies might even make them put a deposit down,” Rothenberger said.

Plus, establishing credit early can help drive up your score. That’s because 15% of that magic number is based on the length of time you’ve had credit. A longer history gives lenders a better picture of your payment behavior.

But like anything in life, you can have too much of a good thing. When getting that first piece of plastic, turn to your local credit union. This helps ensure that you’re not getting involved with a predatory lender, Rothenberger cautioned.

Then, maintain that card. Carry a low balance and make your payments on time. Avoid getting another card for at least 12 months. Opening too much credit too soon can have a negative impact on your score.

“Stick to one card right now. Down the road, you can always request an increase in your line of credit,” Rothenberger said. “Besides, you don’t want to be making payments to all kinds of different places.”