Credit Advice for Young Adults

October 7, 2022

Credit can make a significant difference in obtaining your life goals. Creditworthiness can impact milestones such as buying a house, paying off debts, or purchasing a car. It’s never too late to build credit; however, starting while you are still young is best.

Let’s look at credit scores and credit reports, how they affect your borrowing ability, and some tips to help establish and improve your credit.

Credit Reports vs. Credit Scores

These terms are often confused, but they are decidedly different.

credit score is a single number ranging from 300 to 850 and provides a snapshot of your financial situation and potential risk to potential lenders. FICO and VantageScore are the two main score models. Both models consider your record of late or on-time payments, your available credit amount, and your credit history.

credit history contains more information about your financial accounts, payments history, and any previous credit inquiries made by lenders. These adverse events, such as bankruptcy filings, foreclosure filings, and lien placements on your property, will be part of your credit report. However, your credit score is not included in your report. Experian, Equifax, and TransUnion are the three major credit reporting agencies.

Lenders like credit card companies and mortgage lenders may only use your credit score. Mortgage and car loan originators will use your credit score and report. Landlords and insurance companies may review your credit report, but they may not have access to your credit score.

Credit-Building Strategies

Here are some ways to build a strong credit history, improve your scores, and increase your report.

  • Pay your bills promptly. On-time payments will help you avoid any negative credit marks. In addition, lenders want to see that your ability to repay borrowed money is a top priority.
  • Do not use all of your credit. Lenders prefer to see utilization ratios below 30%. For example, if you have a credit limit of $10,000, don’t exceed $3,000 monthly.
  • Reduce unsecured debt. Prioritize student loans, credit cards and personal loans. This tactic will increase your utilization and reduce interest payments.
  • Consider a starter credit card. These cards are secured with a fully refundable down payment and can be used by college students, young professionals, and those with subpar borrowing histories to build credit.
  • Look into a credit builder loan. These loans work in reverse: you make reportable monthly payments to the major credit agencies and then collect the accumulated cash at the term’s end.
  • Utilize other credit-building tools. It is essential to pay your bills on time. However, you won’t be able to get credit for every bill. Look for credit services that add on-time qualifying payments to your credit score.
  • Monitor your credit report. Federal law gives you the right to a free copy of your credit report each year. You should verify everything is correct and contact the reporting agency to rectify any errors.

Trust Pacor Mortgage

Pacor Mortgage is your best resource when it comes to mortgage financing. For more than 36 years, our expert real estate team has helped potential homeowners navigate the challenging and always changing real estate market. We would be honored to help get you in the home of your dreams and stand out from the competition.

Contact one of our loan officers today at 773-881-7744 to schedule an appointment or visit our website to start your mortgage application.


2021 Pacor Mortgage Corp. Pacor Mortgage Corp is located at 14930 Cicero Ave, Oak Forest, IL 60452, Phone 773-881-7744 (Unique Identifier #120945). For Licensing information, go to: Pacor Mortgage Corp is an equal housing lender and is licensed by the Secretary of State under the Illinois Residential Mortgage Lending Act and is assigned Illinois Residential Mortgage License MB.0000892. Pacor Mortgage Corp branches operate with the following licenses and is assigned Illinois Residential Mortgage License MB.0000892-001, with a Wisconsin License # 260345BA, Palos Heights NMLS 261297 and is assigned Illinois Residential Mortgage License MB.0000892-008, Colorado, Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, California license # 41DBO-67516, Florida MLD1075, Indiana DFI 13177, Maryland 23528, Michigan FL0828, Michigan SR1130, Minnesota MN-MO-120945, North Carolina L-184546, Ohio RM.804151.000, Pennsylvania 43855, South Carolina, MLS – 120945, Wisconsin 120945BA, Kalamazoo, MI NMLS 120945 also DBA Lake Pacor Home Mortgage. This is not an offer for an extension of credit, a rate lock or a commitment to lend. All loans must satisfy company underwriting guidelines and any investor overlays. Any of the advertised products may be discontinued at any time. Information and pricing are subject to change at any time and without notice. Loans are being committed and closed at expressed rates although these rates change and may not be available at time of your lock in, commitment and / or closing. Pacor Mortgage Corp is not affiliated with your current lender, nor is it an agency or extension of the Federal Government, Fannie Mae, Freddie Mac or HUD.