A recent “State of Credit survey” by Experian shows that millennials have an average credit score of 628. That means that this generation has the lowest average credit score of any other age group in the country and stands at more than 50 points below the national average.

If you take that figure at its face value, you might incorrectly assume that millennials are generally financially irresponsible, which is not the case. There is data to show that more millennials are actually buying homes and making some very responsible financial decisions as opposed to the typical norm of “living in the here and now.” This same data shows that:

• More millennials are opting to further their education and as such accruing more student loan debts
• Millennials are the main reason why the housing market has seen an upturn

This, however, does not mean that millennials do not have some money or debt management issues. But as more and more millennials look to further their studies and buy their dream homes, the question of raising their credit score always comes up. If the generation born after 1980 is going to become a major player in the housing market, then it is important that they find ways through which to raise that credit score from an average of 628 to something more presentable and desirable.

So, what can you do as a millennial to build your credit score and credit history?

How You Can Build Up Your Credit Score

As a millennial looking to build up your credit score, there is one thing that you simply must do before you even think of doing anything else on this list: get your credit report.

Without a credit report, you will not know which areas are hurting and which ones are helping your credit score. You are entitled to one free credit report from any one of the three major credit reporting companies – Experian, Equifax or TransUnion. This credit report gives you a better understanding of your spending habits and shows you where you could have gone wrong. It also highlights any mistakes that could be ruining your overall credit score.

There might be some errors that are simple enough to correct but unless you take that upon yourself and call the agencies as well as the reporting companies, then those errors will persist. As long as those errors stay on your credit report, they will just keep ruining that score.

Once you have your credit report and know which areas need work (credit card bills, student loans, and so on), you can begin the credit score building process. 

Start by Consistently Paying Down Debt

There are things known as “active debts.” This means that they are debts that are being serviced. The only reason people report you to credit rating bureaus is because you let debt payment windows lapse for more than a period of three months; meaning your bills are way past due. However, if you are constantly paying down your debt or are in constant communication with the people you owe, there shouldn’t be any reason why your account should be flagged as inactive.

The best thing you can do is to ensure that you make the payments on time. Late payments have a seriously negative impact on your credit score. To ensure that you never miss a payment, no matter how small, think about setting up automatic payments through your online banking. This goes to your water bills, gas bills, credit card bill, student loans, and everything else that needs to be paid down each month or on a regular basis.

Get Yourself a Secured Credit Card

Some people think that the best way to maintain a good credit score is to avoid debt altogether; however, this kind of thinking is flawed. Your credit score is essentially a number that shows lenders how reliable you are when it comes to paying back debt which cannot happen if you do not have any debt to reliably pay back. If you are credit card averse or feel as if you do not have enough financial discipline, then look into getting yourself a secured credit card instead.

This kind of credit card requires you to deposit money against the card’s limit. Say for example you get a credit card that has a $1,000 limit; a secured credit card will need you to deposit $1,000 onto the card before you start using it. As you use it, the available balance will reduce. The best part is that this card requires monthly payments that need to be made on time and does not allow you to use more than you have on the card. It’s very much a debit card, but with some serious credit score-raising capabilities.

You will begin to see your score rise if you consistently use this card and pay it down on time each month. This way, you get a better credit score while maintaining some level of financial discipline.

Stop Applying for Multiple Loans

Every time you apply for a loan, your credit score takes a slight hit. This is mostly because lenders begin to think that you are desperate for money and as such must not be very good with it. However, this does not mean that you shouldn’t apply for loans or that you shouldn’t shop about. Some loans give you a 30-day grace period; a period within which you can apply for several similar loans through different lenders. These include loans such as:

• Mortgages
• Car loans
• Student loans

These are typically loans that involve a lot of shopping around, and since everyone wants to find the best rates on the market, you are allowed to look at several lenders without consequence. Take advantage of that 30-day period and apply for as many as you can without necessarily seeming desperate. Who knows, you just might get better deals.

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