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Credit makes a lot of people cringe.

When I asked my Facebook followers what their biggest financial regrets were, I definitely had some repeat answers (shout out to student loans!). But what surprised me was the remorse over credit card debt.

“It ruined my life.”

“I know there are ways to make them work for you, but starting with one bad decision after another, it’s hard to get to that point.”

“Granted I’ve never missed a single payment and my credit score is great, but keeping up on it is such a pain.”

I get it. Studies have shown millennials are shunning credit cards at stunning rates. The thought of drowning in debt is hard to stomach for many.

Here’s the thing about credit, though: It’s a Catch-22. If you use credit the wrong way, your financial future can take a nosedive. But if you don’t use it, your financial future can still take a nosedive. Adulting is fun, isn’t it?

That’s why I’m breaking down the basics of credit, so you can build it like a boss.

Why You Need Credit

Just like how you eventually need to learn to cook and clean (*eye roll*), you’ll also need to learn how to build healthy credit. Using credit cards can be a quick path to good credit and a strong credit score, which is key to financial independence.

Your credit score is used to determine what type of interest rates you get slapped with when you take out a loan for things like houses or cars. Typically, the lower your score, the higher your interest rate will be. Also, your date might even see a low credit score as a romantic deal-breaker.

What Your Credit Score Takes Into Account

There are many different types of credit scores (I know… v. annoying), but you should treat your FICO score as your main squeeze since it’s the most widely used score. Your FICO score is based on five major categories:

  • Payment history (pencil all those due dates into your planner and pay those bills on time).
  • Amounts owed (carrying big balances = no bueno).
  • Length of credit history (so get started taking out credit, like, now).
  • New credit (applying for new credit can ding your score).
  • Types of credit.

FICO scores range from 300 to 850; anything below 670 is considered below average. Check out your credit report and credit score for free at myBankrate.

4 Simple Steps to Build Good Credit

1. Pay your balances in full, on time, every time.

Late payments and carrying a balance from month to month can wreck your credit score. Mentally, treat your credit card like a debit card, and only use it when you know you’ll be able to pay it off when the bill comes. Set up automatic payments to make sure you’re paying your bills on time.

The easiest way to build credit? Link a small, fixed expense to your credit card; one you know you can pay off every time, like your Netflix subscription. This is a simple way to slowly build credit, without having to stress over accidentally overspending.

Since we live in an imperfect world, things pop up, and there will likely be times you’ll need to use your credit card to bail you out. If that happens, work hard to pay off high-interest credit card debt first. You also shouldn’t have a bunch of small balances on multiple cards. Consolidate those with a balance transfer credit card and (bonus!) reduce the amount of interest you pay on your total credit card debt.

Then, make it a priority to pay off that pesky balance!

2. Keep a low credit utilization ratio.

A funny thing about credit: Just because it’s there doesn’t mean you should use all of it. Kind of like the bread basket at restaurants. It might be sitting there right in front of you (TAUNTING you), but you shouldn’t eat all of it, or your body will hate you.

Your credit utilization ratio is the total amount of revolving credit you use per month, compared with the total amount of credit you have available. It’s recommended to use no more than 30 percent of your total available credit, even if that credit comes from a variety of cards.

Here’s a quick video explaining the credit utilization ratio rule using Skittles. I like visuals, OK?

3. Apply for the right card.

When you start feeling comfortable with credit cards, a whole new world of sweet rewards, cash back and travel perks awaits you! But before you make a big splash when it comes to credit, it’s smart to start with dipping your toes in.

Be selective with what cards you apply for (avoid multiple applications), and go for a secured credit card, which you’ll likely find at your bank or credit union. Secured credit cards require a security deposit, which serves as collateral against your credit line.

Still feeling fearful? You can ask a family member to add you as an authorized user on their credit card, which means they’re liable for the charges and debt, not you. This can be risky (you won’t build stellar credit if the primary cardholder misses payments) so be very selective as to whom you choose to do this with.

In high school, this is how I built credit without swiping my card once. I was an authorized user on my dad’s credit card but was under strict instructions to only use it for emergencies.

4. Avoid store credit cards.

If you know me, you know I love a good deal. So it can be hard to pass up the deep discounts offered by a lot of stores when you sign up for a store credit card. But taking out a store credit card can ding your score and make it harder to build good credit, especially for beginners.

Store credit cards typically carry high interest rates and low credit limits, so not only could you end up paying more in fees, it’ll be harder to maintain that healthy credit utilization ratio we talked about.

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