When you turned 18, it was time to turn over a new leaf into adulthood. This included graduating high school, determining post-graduation plans, finding a university or new career, and so much more. It was the start of your independence. Did you also think about your credit score and how it was going to affect your future financial goals? Building credit as early as possible is important for signing up for credit cards, opening loans, getting mortgages, and so much more. So, how do you build credit?

What Is Credit?

First, let’s go over the basics. Credit is the ability to borrow money to buy goods and services and pay them back at a later date under a financial agreement with the addition of interest. To measure how much credit you have built, a financial institution will reference your credit score. This three digit number ranges from 300 to 850, 300 being the lowest and 850 being the highest. This score is made of five factors:

• Payment history
• Credit usage
• Account mix
• Credit age
• Inquiries

The more fiscally responsible you are, the better the score. And the earlier you start, the better for your long-term financial success.

Start With A Beginner-Friendly Card

With good credit comes great responsibility. Many people misunderstand a credit card and their intended purpose, and build poor credit because of it. To build good credit, start with a beginner-friendly card. Look at:

• APR (Annual Percentage Rate) - The cost of credit expressed as a yearly interest rate. Ideally, you want this to be as low as possible. If you carry a balance on your card, this rate will increase how much you pay for the goods and services over time.
• Annual fees - Some credit cards charge a yearly maintenance fee. However, there are plenty of financial institutions that offer fee-free credit cards, like Partners 1st credit cards.
• Credit limits - Credit limits are the maximum amount of money you can borrow. This amount usually depends on your credit history. Tip: It’s recommended to use 30% or less of your credit limit to avoid credit over-utilization, which hurts your overall credit score.
• Perks - Many cards offer perks to use them, and these perks can save you money. When comparing credit cards, pick one that rewards your lifestyle and offers rewards.

Some financial institutions offer starter cards that are designed to help teach and build credit. These starter cards are more accessible to young adults who have no previous credit history. However, note that these cards usually offer lower limits and higher interest rates to mitigate the risk for the financial institution.

Make On-Time Payments

Once you have your card, it is important to only make purchases that you can afford. For example, if you open a new card with a $5,000 limit, this does not mean you have $5,000 added to your checking account. Whatever you withdraw from your credit card needs to be paid back. You will receive a bill with your balance and have three repayment options: Pay in full, pay the minimum, and other (which is a fill-in-the blank option of whatever you can afford that is more than the minimum but less than the full amount). The biggest killer when it comes to managing a credit card is the interest. Remember those three repayment options before? If you only choose to pay the minimum, whatever balance carries over from month to month will accrue interest.

The key to building credit is making on-time payments ALWAYS.

Avoid Opening Too Many Accounts

Many people assume that having access to more credit is automatically a good thing. In reality, too much available credit can encourage overspending, which often leads to unmanageable balances and long‑term debt. Understanding how credit works—and how lenders evaluate you—helps you build a healthier financial foundation.

A key part of this evaluation is the hard inquiry. When a lender requests your full credit history, they’re assessing your past borrowing behavior and your current financial habits to determine whether you’re a trustworthy borrower. These inquiries stay on your credit report for up to two years and can temporarily lower your credit score.

If you’re just starting out, it’s smart to begin with one credit account. Use it for small, manageable purchases you can easily pay off each month. This approach helps you build a positive payment history—one of the most important factors in your credit score—without taking on unnecessary risk.

Check Your Credit Regularly

Many companies offer ways to monitor your credit. Some of these companies include:

• Experian
• Credit Karma
• Federal Trade Commission

Your financial institution may partner with one of these companies so you can monitor it right from your online access app. When monitoring your credit score, you want to look for any unusual dips or rises that seem suspicious or don’t line up with your current financial habits. You also want to look at your monthly statements see if there have been any unusual purchases using your credit card. Pro tip: Set up fraud alerts with your lender to catch potential fraud early.

Common Mistakes To Avoid In Your 20s

Early in your credit journey, it’s important to avoid making poor financial decisions that can hurt your credit score. Common mistakes include:

• Maxing out your credit card - Not only does this over-utilize your card, but it can also lead to additional fees
• Ignoring bills or late payments
• Co-signing with someone who makes poor financial decisions. If they miss any payments, that reflects on your credit report.

Building credit in your 20s isn’t about chasing high limits or opening as many accounts as possible—it’s about forming consistent, responsible habits that follow you into every major financial milestone.