Turning 18 is a milestone defined by new freedoms, such as the right to vote or finally ditching the curfew. But while graduating high school or starting college often grabs the headlines, a critical change is happening behind the scenes: the beginning of your credit history.
Credit may not feel urgent at age 18, especially when financial goals like retirement and homeownership seem far away. However, the financial habits you form today will largely influence your adult life. How you manage money today can determine how easily you’re able to rent an apartment, buy a car, or qualify for a mortgage.
“How you manage your money today will impact your financial future because at 18, you’re now building a credit history that matters for many years to come,” Jeff Richardson, EVP and Chief Marketing Officer at VantageScore. “Opening bank accounts, using credit wisely and taking out loans thoughtfully are all important aspects of building and maintaining a good credit report and score.”
Understanding credit early doesn’t require financial expertise or a high income; it just requires awareness and smart decision-making. Building credit is about developing habits that support long-term financial wellness.
To get to know your credit score, download the infographic fact sheet below on:
- What is a credit score
- Why it matters
- How a strong credit score can help you
- Why do you have different credit scores
- What impacts a credit score
- What does not impact your credit score
- How you can improve your credit score
Jeff Richardson recommends young adults take these four steps to start building a positive credit history:
Step 1: Check Your Credit Score for Free
Becoming aware of your credit standing allows you to make informed decisions and correct potential issues early. VantageScore credit scores were introduced in 2006, and the credit scoring model was initially developed by the three Nationwide Consumer Reporting Agencies, Equifax, Experian, and TransUnion. More than 3,700 institutions use VantageScore credit scores and tools every day to assess consumer creditworthiness, including all 10 top U.S. banks. In 2024, lenders and consumers collectively used VantageScore credit scores 42 billion times, representing a 55% yearly increase. Know your credit score, manage it well, and take steps to improve it. Visit Free Credit Scores to learn how to get your credit score at no cost.
Step 2: Pay Bills on Time, Every Time
Paying bills on time or even ahead of time is one of the best things you can do to build a positive credit report and raise your credit score. Even one late payment can have a major impact early in a credit journey, when there isn’t much history to offset it.
Find a system for managing your bills and expenses that works well for you. Some people keep a spreadsheet, others use online programs or digital apps. In fact, your current bank may offer online bill pay so you can set up automatic payments (just make sure you always have enough in your account so you don’t bounce payments). Discover what works best for you to ensure that you always pay bills before the due date. Over time, a strong payment history demonstrates reliability and builds trust with lenders.
Step 3: Budget and Create an Emergency Fund
Creating a budget helps young adults make sure that essentials are covered before spending. Start a viable budget by analyzing wants versus needs for each month. When creating a budget, you should also make sure to use your net income after taxes rather than your gross income before taxes so that you will get a realistic idea of what you can afford and where you should make cuts.
Furthermore, if you don’t already have a savings account, consider opening one up. While a savings account won’t show up on your credit report, it does provide you with a simple way to save in case of an emergency. That way, if you’re hit with an unexpected bill, like car repairs or medical bills, an emergency fund could provide you with a cushion so your finances aren’t derailed. You will still be able to pay it on time, and that timely payment can protect your credit report and score.
Step 4: Take Out Loans Wisely
Taking out a loan and paying monthly installments diligently helps build good credit. However, you shouldn’t take out more than the amount you need or can afford. For example, if you need a car loan, consider a moderate car that does the job rather than an expensive, upscale one that will take much longer to pay off. Likewise, school loans are a necessity for many people. While you likely won’t have to start making payments on these loans until after graduation, you should try to keep student loan debt at a minimum. Take out only what you need for tuition and associated school expenses, rather than borrowing additional amounts for vacations. That way, you will have a smaller loan to pay off when you start working, so you never have to stress about making a payment on time.
Every other financial transaction while you are in college is an additional chance to build and enhance your credit history, and you should treat them as such. Pay your bills on time, especially those in your name, such as utilities.
“Smart steps at age 18 can help you achieve a great credit score and set you up for a lifetime of good financial habits,” says Richardson. “Even if you’re older than 18, there’s no better time than the present to make wise financial decisions that will help you build a credit history that will benefit you long term.”
To learn more about consumer credit, visit https://vantagescore.com/consumers and follow VantageScore on Instagram and Facebook.
