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Why It’s Important To Build Credit In Your Twenties

As you enter your twenties, there are a lot of new financial responsibilities and things you need to start thinking about that you just didn’t have to worry about as a teenager — like paying rent on time, budgeting your finances, getting your first credit card, and building credit

Financial conversations about credit cards, credit scores, and building credit may seem intimidating as you enter your twenties, especially since it’s unknown territory for many. In fact, fewer than 25% of high school students are required to take a personal finance course, and Gen Z has the lowest financial literacy of any other generation. However, financial conversations shouldn’t be daunting, and thankfully, building credit is something relatively easy to start. You can build a high credit score fairly quickly, and it is better to begin building a history of credit sooner rather than later. 

Read on to learn the ins and outs of what a credit score is and why it’s important to build credit now in order to secure your financial future.

What is a credit score?

According to the Consumer Financial Protection Bureau, a credit score predicts how likely you’re to pay back a loan on time. A credit score is required to qualify for jobs and rent an apartment or house. You’d think they’d teach us this stuff in school! 

Your FICO score breaks your credit into five parts: accounts owned, new credit, length of credit, payment history, and credit mix. These hold various percentages, affecting your credit's overall strength. Lenders want to make sure you are not a liability and will be able to repay your loans, which is why you may be asked for your FICO score when applying for apartments or rentals.  

Why is building credit in your twenties important?

Your credit score influences the way you interact with society. Getting a credit card and building credit may seem like a task you can put off for when you’re older, but establishing a credit foundation early on in your life is crucial. According to One Main Financial, “The longer you have credit, the better your chances of achieving a higher score will be; that’s why it’s so important to start building credit while you’re young.” A high credit score gives you greater negotiating power and enables you to borrow money more efficiently. Good or high credit scores indicate to loaners that you make intelligent decisions and are responsible. 

Gen Z already understands the importance of this, as studies show that 50% of Gen Z has a credit card and a prime credit score. The survey, which Transunion conducted, examined 33 million Gen Z consumers who opened a traditional lending product, such as a credit card, auto loan, mortgage, personal loan, or student loan, deeming them “credit active.” Thankfully, despite being one of the more financially illiterate generations, Gen Z is already ahead of the curve when it comes to building credit. If you’re interested in trying out a new credit card or getting your first one, look at this “Best Student Credit Cards of August 2022” list by Forbes. Some great student credit cards to consider, according to the list, include Discover, Deserve EDU, and Bank of America. 

But how do you begin building credit once you get a credit card? Her Campus spoke with Steve Wilson, founder of Bankdash, who breaks down some common credit card myths and explains how to start building credit. 

“According to my study, over half of Americans believe that having a small credit card debt rather than paying it off monthly is better for their credit,” Wilson tells Her Campus. “However, all it does is make you pay interest.”

Wilson encourages all young people to follow this strategy in terms of building credit: “Make a few smaller monthly payments or schedule payments to coincide with a paycheck or other infusion of cash. Maintaining low credit use, which significantly impacts scores, is possible by regularly decreasing card balances rather than waiting for the monthly statement.” Wilson’s research has proven this strategy to improve and maintain a good credit score

The key objective to building credit in your twenties and establishing good credit is responsibility. Building credit is a great way to exercise self-discipline and challenge yourself to stick to a goal — and more importantly, your older self will thank you for it later. 

Hi! I'm a writer for HerCampus National. In my free time, I love listening to music, spending hours on Tik-Tok, and shopping. Fun fact about me, I wrote for the HerCampus chapter at St. John's and I was president from fall 2020 to spring 2021.
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