You might be thinking that credit is something you can worry about later, after college, or when you’re buying a house or starting a business. You know, when you’re an “adult.” But the reality is that now that you’re 18, you are an adult and can begin to take some simple steps to put yourself on the right financial path for the future.

You’re going to need credit to navigate life smoothly. Renting an apartment, financing a car, qualifying for credit cards, and even being offered some jobs all require good credit. By establishing good financial habits now, you can start off on the right foot. We are here to help you begin building credit and avoid some common financial pitfalls. Your future self will thank you!

1. What Is Credit, Really?

Credit is the ability to borrow money with the understanding that you’ll pay it back later. Lenders will look at your credit history to determine how trustworthy you are, meaning, how likely you are to pay back the money. Lenders use both your credit score and credit report to decide if they’ll lend you money.

Your Credit Score

Your credit score is a three-digit number that reflects how reliable a borrower you are. The higher the number, the less risk from the lender’s end, and the more likely you’ll be approved. Your credit score is calculated using a few different factors, including how much debt you have, how consistently you pay your bills and loans, and how long you’ve been using credit. Think of it as your financial GPA—a high score is a better grade in money management.

Your Credit Report

Your credit report is a more detailed record of your credit history. It shows your loans, lines of credit, payment history, income, and more. Lenders use both your credit score and credit report to decide whether to lend you money, how much, and what the interest rate will be.

Credit bureaus generate credit reports and scores. They collect and keep records about consumers’ credit histories. Your credit score may vary depending on the bureau's metrics, but the information on your credit report should be the same.

2. Why Your Credit Score Matters—Even at 18

Just because you’re starting out doesn’t mean your credit score doesn’t matter yet. Many upcoming life events will require good credit. Here are just a few:

• Applying for a student credit card. Your score will determine your approval, credit limit, and interest rate. A lower interest rate means your payments are lower.
• When renting your first apartment, most landlords will check your credit before offering you a lease. A low credit score means they don’t know how reliable a tenant you will be.
• Financing a car: Higher interest rates will lead to higher monthly payments. If you have little or no credit history, you may need a cosigner to get the loan.
• Setting up utilities or phone plans. You may not need credit to get these, but certain phone and utility companies will require upfront deposits and fees if you don’t have any.

Make smart decisions now to have lower interest rates, more flexibility and options, and more money in your pocket.

3. Common Credit Myths Grads Should Ignore

There are many myths about credit. Many of them are false and can lead you in the wrong direction.

• "I don’t need credit until I’m older." Not true. We just listed several things you’ll need credit for soon. Besides, you shouldn’t wait to establish credit until you need it. Be proactive and develop good credit now.
• "Having no credit is better than having debt." Lenders look for responsible borrowers, so having no credit gives them no insight into your financial habits. It’s better to have debt and manage it responsibly.
• "Checking my credit score will hurt it." There are two types of credit checks. “Soft checks” are the type you do yourself. This does not affect your credit. “Hard inquiries” are performed by lenders and can make your credit score dip, though this dip is temporary.

4. Smart First Steps to Building Credit

Building credit doesn’t mean taking out a risky, large loan. There are smart (and safe) options available to you.

• Apply for a student or secured credit card. These credit cards tend to have lower limits and are designed to help you build credit. Secured credit cards tend to require a security deposit.
• Use it sparingly. Don’t put everything on your card. Use it once in a while to maintain a low balance and pay it off every month.
• Become an authorized user. Depending on their credit, your parents can add you as an authorized user to their card. You’ll benefit from their good credit habits. Just make sure you are transparent about your card use.
• Only borrow what you can afford to repay. Don’t put more on your credit card than you can afford each month. If you are carrying a balance month-to-month, you are going to be paying interest.

5. Habits That Protect Your Credit

Building credit is one thing. Maintaining good credit is another. Here are a few responsible habits to practice:

• Always pay bills on time. Making late payments will negatively affect your credit score.
• Keep usage below 30%. If you have a credit limit of $2,000, you should be using $600 or less at any given time. This shows lenders that you aren’t overextending yourself.
• Check your credit report annually. A free credit report is available at AnnualCreditReport.com. Make sure there are no errors or lines of credit you don’t know about.

6. Red Flags to Avoid

Just as there are good habits, there are also red flags to steer clear of:

• Co-signing for friends or roommates. If they miss a payment, your score will suffer.
• Applying for too many cards at once. You don’t need multiple cards right now. In fact, too many hard inquiries at once raise concerns for lenders.
• Falling for "buy now, pay later" traps. Installment plans might seem tempting, but they can quickly lead to overspending and credit problems.

7. How Marion Community Bank Can Help

At Marion Community Bank, we offer financial resources for high school grads like you. Check out the following:

• Student Checking Accounts. Open a checking account for just $25 and no monthly fees. This option is available to full-time students aged 24 and under.
• Debit Cards. Make your spending easier and manage your money with our app.
• Friendly advisors. Our banking professionals are here to answer any questions. With locations in Marion, Selma, Maplesville, Jemison, Clanton, and Montgomery, our financial professionals are nearby. Let us help you begin your credit journey.

Start Strong, Stay Smart

Credit doesn’t have to be scary. Think of credit like a tool—you only need to know how to use it. Using your credit wisely today will lead to a better future.

Whether you are college-bound, beginning work, or taking some time off, begin your credit journey now. Stop by Marion Community Bank and build a strong financial future—starting today.

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