- My name is Zelda and I am a sales associate
at the Ghirardelli Chocolate Company.
Since being furloughed, luckily my parents have been able
to support me, but I have turned to using a credit card
for certain purchases.
I've been picking up a lot of new hobbies
with all this extra time that I have.
I've taken up painting again, and just recently,
me and my group of friends decided
to start a Dungeons and Dragons campaign,
so we're gonna do that over Zoom.
The only thing I know about building credit
from school is that you need to do it.
(gentle music)
I want to know about building credit
because my family has told me that if I'm gonna
take out student loans, I need to be serious
about it, so I can get a good interest rate,
so I'm not in debt for the rest of my life with loan rates.
But again, I just don't know how to build it.
So, I keep getting told you have to do it,
but then not told how to do it,
and that's been really frustrating.
How do I do it?
How do I build credit?
How do I maintain it when I'm taking things out
like loans, or when I'm paying off debt,
how do I keep it from getting trapped in a low number?
(percussion music)
- Hey Zelda, I'm Jean Chatzky,
I'm a financial expert and the CEO of hermoney.com.
(gentle music)
And I get why you are so confused about credit.
It is a really important tool to have for adult life,
but very rarely does anyone tell you how to get it.
A credit score is just a number that is based
on your credit history, and your credit score
looks a lot like an SAT score.
It runs from about 350 to 850,
and the closer you can get to that 850, the better,
but as long as you are in the seven hundreds or above,
you are doing just fine.
Here's the way to get started.
I want you to look for something
called a secured credit card.
A secured credit card allows you to put a credit card
in your wallet without having a lot of income.
You make a deposit of a small sum of money,
a couple hundred dollars with the bank that will issue you
this secured credit card.
That couple hundred dollars becomes your credit limit.
Then every month you want to use that credit card.
You want to just charge it, make a little bit
of a purchase on one, don't go crazy,
don't charge more than a hundred dollars,
and then pay it off every single month, in full.
As long as you charge a little bit, pay it off,
charge a little bit, pay it off, every single month,
usually for the next 18 to 24 months,
you're gonna build a good credit history,
which means you're going to build decent credit.
And then that card, in most circumstances,
will convert to a regular credit card.
You want to do the same thing, charge a little, pay it off,
charge a little, pay it off.
And eventually you've got this long,
robust credit history that you can use
to make those bigger purchases that you want later on.
And Zelda, the last thing I want you to know about this
is that building credit doesn't happen overnight,
but it does happen.
So just stay on track for the next two years
and you are gonna be good to go.
(percussion music)