Dear Daughter: About Building and Responsibly Using Credit

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Dear Daughter:

In the beginning, select and join a credit union. Use this financial institution as your primary bank. Credit Unions are unique financial institutions. As a member you are an owner, not just a customer.  Your credit union is almost everywhere you are with shared services. Most credit unions offer free checking, free debit card services, free ATM’s, no monthly service fees, low cost auto loans, low interest rate/no fee credit cards and more. Search for one near you, just click here.

Credit Unions are insured by the National Credit Union Association and backed by the Federal Government up to $250,000.00.

 Begin developing a strong relationship by being responsible with your accounts. This will help you establish a solid reputation with your primary credit union.  In many ways, this illustrates your self-respect in the financial world.

·         Balance your checkbook at least monthly; ask a credit union officer to show you how.

·         Do not rely on overdraft protection; set up shares/savings secured in case you need it.

·         Overdraft protection is there to cover math errors only; if you have to use it, pay it off immediately.

·         Do not live on credit – it is but a tool, use it wisely as such.

·         Avoid credit monitoring/score watching services – these are a waste of time and money.

Build emergency savings for emergencies; they happen. Build separate savings for play such as getaways and vacations. You can set up special savings accounts with your credit union.

Building credit requires using credit and using it wisely. Limit your use of credit by using it wisely. Don’t pay interest on disposable goods such as food, gas, clothing, entertainment or vacations.

Once you have your credit union account set up, you may wish to ask a parent or relative with good (740 FICO) to excellent credit (780 FICO) to allow you to inherit their credit reputation. This tool, properly used, can greatly enhance the ability of one with a thin or young credit file to build one’s own credit in a more expedited manner.

Image attribution

Financially Speaking™ James Spray, MLO, CNE, FICO Pro
CO LMO 100008715 | NMLS 257365 | July 8, 2013
Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

4 comments on “Dear Daughter: About Building and Responsibly Using Credit

  1. Jim Lachenmaier says:

    Thanks Jim,   Hope this finds you well.   Jim Lachemaier



  2. Andy says:

    Thanks for your blog! It contains the best advice I’ve found on my way to recovery from Ch. 13.

    I am half-way through my Ch.13 payment plan.

    Before reading your blog, I had applied for secured credit cards from BofA where I’ve had accounts for many years and TD Bank, but got denied.

    I searched for credit unions in my area and became a member of one. I was able to get a secured credit card from Signal Financial Credit Union. I used it today for the 1st time! I’ll make sure to stay in the 10% of credit utilization.

    Thank you!


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