The Importance of Saving & Building Credit

A Guide for Teens

As a teenager or young adult, you may not have thought much about building credit or saving money. But the truth is, it's never too early to start thinking about your financial future. Building credit and saving money are two essential steps to achieving your long-term financial goals.

What is a credit score?

Your credit score is a numerical representation of your creditworthiness. It's a three-digit number that ranges from 300 to 850 (higher being better), and it's based on your credit history. Your credit history includes your credit accounts, payment history, and the length of your credit history. For more information about what goes into a credit score and how to maintain a good one, visit this blog post.

Why having a good credit score is important?

Having a good credit score is essential because it can impact many areas of your life. For example, a good credit score can help you qualify for lower interest rates on loans, credit cards, and mortgages. It can also help you rent an apartment or get a job. On the other hand, a poor credit score can make it difficult to qualify for loans, and you may end up paying higher interest rates.

Ways to build credit as a young adult

Building credit as a teenager can be challenging, but it's not impossible. One way to build credit is by getting a starter loan to build credit. At Texas Bay Credit Union, we offer starter loans for members 18 years and older, specifically designed for young adults who want to start building their credit. With a starter loan, you can borrow a small amount of money and pay it back over time. By making your payments on time, you can start building a positive credit history.

Another way to build your credit is to get a secured credit card. Texas Bay offers a shared-secured credit card for members age 18+. With this option, you use the money in your savings account to secure a line of credit. You select your credit limit, then place the amount, plus 20%, into your Texas Bay savings account. Pay your bill on time every month and after a period of time or regular on-time payments, the card can be converted into a regular credit card, releasing the hold on the money in your savings account. The good news, is you still get all the benefits of our regular credit cards – lower interest rates, no annual fee, earn cashback, 24/7 fraud protection, and more.

Most of all, pay your bills on time! Late payments are the number one reason credit scores are dinged. Try to pay off the entire amount of credit cards each month - you'll save on interest as well.

Monitor your credit report for potential fraud and to be aware of how you're doing with your credit. Make payment adjustments and/or report errors in your credit report as soon as you can.

How to budget your money wisely

Budgeting your money wisely is another essential step to achieving your financial goals. The first step is to track your expenses and income. This can be done through a budgeting app or by creating a spreadsheet (like this one). Once you know how much money you have coming in and going out, you can create a budget.

When creating a budget, make sure to prioritize your expenses. This means paying for necessities like housing, food, credit cards, and transportation first. Then, you can allocate money for savings and discretionary spending.

Ways to grow your money at Texas Bay Credit Union as a teenager

At Texas Bay Credit Union, we offer a variety of products and services to help everyone grow their money. For example, we offer Savings Accounts with competitive interest rates. We also offer Certificates of Deposit (CDs), which are low-risk investment options that offer higher interest rates than regular savings accounts. With a CD, you can earn more money on your savings while still having the flexibility to withdraw your money after the maturity date.

Open an account and get started with Texas Bay Credit Union today!

In conclusion, building credit and saving money are two essential steps to achieving your long-term financial goals. By getting a starter loan to build credit, opening a share-secured credit card, budgeting your money wisely, and setting up your savings, you can start building a positive credit history and grow your savings. At Texas Bay Credit Union, we are here to help you every step of the way.