How to Build Credit as a Young Adult

Building credit as a young adult is an essential step toward financial independence. A strong credit history can help you qualify for lower interest rates on loans, secure rental housing, and even impact job opportunities. But where do you start?

At Granite Credit Union, we're committed to helping our members & the community make informed financial decisions. Whether you're just starting or looking for ways to improve your credit, this guide will help you understand the basics of building and maintaining a strong credit profile.

Understand What Affects Your Credit Score

Your credit score is a number that lenders use to assess your creditworthiness. The most commonly used credit score models, such as FICO® Scores, consider the following factors:

  • Payment history (35%) – Paying your bills on time is the most critical factor in your score.

  • Credit utilization (30%) – Using too much of your available credit can negatively impact your score. Keeping balances low relative to your credit limit is key.

  • Length of credit history (15%) – The longer you have active credit accounts, the better.

  • Credit mix (10%) – A combination of credit types, like loans and credit cards, can help your score.

  • New credit inquiries (10%) – Applying for too many credit accounts quickly can lower your score.

Open a Credit Account with a Trusted Institution

If you're new to credit, consider opening an account designed for beginners:

  • Secured Credit Card – Requires a refundable deposit, making establishing credit a tremendous first step.

  • Student Credit Card – Designed for young adults with little to no credit history, these cards typically offer lower limits and manageable terms.

  • Credit Builder Loan – A small loan to help you establish a payment history. Funds are held in a secured account and released once the loan is repaid.

At Granite Credit Union, we offer responsible financial products designed to help you build and maintain a strong credit history.

Use Credit Responsibly

Once you have a credit account, follow these best practices:

  • Pay on time – Late or missed payments can stay on your credit report for up to seven years.

  • Keep balances low – A good rule of thumb is to use no more than 30% of your credit limit.

  • Avoid unnecessary debt – Only borrow what you can afford to repay.

Pay Bills That May Contribute to Your Credit History

Not all monthly payments are reported to credit bureaus, but some services include rent, utility, and phone payments in your credit profile. Consider services like Experian Boost® or other reporting tools that may help strengthen your credit history.

Monitor Your Credit Report Regularly

Checking your credit report is free and can help spot errors or fraud early. You can request a free copy of your credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion.

Be Cautious About Co-Signing Loans

Co-signing for a loan means you are accepting 100% joint responsibility for the debt as if you are the primary borrower. If the primary borrower misses or defaults on a payment, you are responsible for the payment. Your credit is equally impacted. Before agreeing to be a co-signer, be sure you understand your responsibility and liability.

Avoid Common Credit Mistakes

  • Maxing out credit cards – High balances can lower your score.

  • Opening too many accounts at once can lead to unnecessary hard inquiries.

  • Ignoring your credit score – Regularly reviewing your score can help you make informed decisions.

Start Building Your Financial Future Today

Building credit is a long-term process, but starting early can prepare you for financial success. At Granite Credit Union, we provide the tools and resources to help our members build strong credit responsibly.

Want to learn more? Visit us at granite.org or stop by a branch to explore our credit-building options.

Granite Credit Union