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Is It Too Late for Me to Build Credit?

Oct. 9, 2014
Credit Cards
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The Nerds encourage readers to start building credit and making smart financial decisions as early as possible. But if you’re an older person, you may wonder if it’s too late for you to build credit. And if it isn’t, what’s the point? Here’s what you need to know about the importance of credit, no matter your age.

Am I too old to build credit?

Absolutely not. There is no age cutoff for credit applications, and you can’t be discriminated against because of your age, thanks to the Equal Credit Opportunity Act. While credit tends to improve with age — provided you make smart credit decisions — it doesn’t take a lifetime to build a good score. The question is, why would you need to?

What’s the point of building credit if I’ve lived this long without it?

You might be thinking, “I don’t want to go into debt — why would I need to build credit?” Having a good credit score isn’t only useful for taking out loans; it can also help you get utilities or a cell phone without a deposit, rent an apartment, get a job in a sensitive field or obtain insurance at low rates.

Up until this point, it’s safe to assume you’ve never taken out a loan — mortgage or otherwise — or used a credit card. Perhaps you’ve relied on your spouse’s good credit score and history to get you through. But significant others don’t share credit scores, whether they’re married or not, and you need a good credit score of your own.

Why? Two major scenarios can leave you without your spouse’s good credit — death and divorce. It’s important to prepare for the worst for self-preservation. Both of these scenarios would leave you without credit of your own, which would only add to the stress of your newly single status.

OK, I want to build my credit — what should I do?

Whether you have bad or no credit, the process for building credit is largely the same. First, you need to know the factors that determine your credit score. Your FICO score — the score most widely used by lenders — is made up of payment history (35%), credit utilization (30%), length of credit history (15%), types of credit in use (10%) and new credit (10%). Here are the top four things to focus on when building your credit again or for the first time:

  • Pay your bills on time, 100% of the time.
  • Keep your debt balance to credit limit ratio low — no more than 30%, preferably closer to 10%.
  • Check your credit reports annually for any errors and dispute them if necessary.
  • Be patient — it takes time to build a strong credit history.

These aren’t the only smart credit moves you can make, but they will make the most impact. If you’re building your credit for the first time, don’t get bogged down in the minutiae, just focus on big credit wins.

Main takeaways:

  • It’s never too late to build your credit, and you shouldn’t neglect to do so because of your age.
  • Even if your spouse has an excellent score, it’s important to have your own in the event of death or divorce.
  • To increase a bad score or build credit for the first time, focus on paying your bills on time, keeping your debt-to-credit ratio low, and checking your credit reports annually for errors. Also, remember to be patient. Like Rome, good credit scores aren’t built in a day.

Not too late image via Shutterstock