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Updated: Jul 27, 2023

Lit Credit Tips You Should Know In Your 20’s.

13 FAQs on credit building basics for adulting

Back in college, Summer '16 was the start to building credit with my first credit card #BestSummerEver

Fast forward to today, I have multiple rewards-based credit cards and a quality credit score that has helped me get approved for my first apartment (link to moving on up page) and make traveling and big purchases more affordable.

How did I make this happen?

Understanding the very basics. `

Remember that scene in Cheetah Girls when Chanel goes on a shopping spree with her mom's credit card and maxes it out? #BigYikes

But don’t worry, I’ve got you covered on some basic AF things you need to know about building credit in your 20s so you don't get caught slipping like her.

Before we tap in, if you're already drowning in credit card debt, eliminate that toxic relationship with a step by step debt plan with the YGB$ bundle.

Let’s go!

1. Who pays when I swipe my credit card?

First, the credit card issuer: the company who sends your bill each month. Next, you will have to repay your credit card issuer after sending a statement at the end of the billing cycle. A credit card billing cycle is simply the time in between billing statements. It can range by between 27–31 days, depending on the card issuer.

2. What is the best way to build my credit?

Basically, to have a good credit score, you have to pay your bills on time and not use too much of your credit limit (aka credit utilization). This makes up 65% of your score. If you pay on time, you avoid extra interest, and if you keep your balance low, less is reported to credit companies.

Two of my favorite $hmoney tips are to keep a low balance which involves trying to pay off your balance before the end of your billing cycle and asking for a credit limit increase every 6-12 months. If remembering dates not your thing, highly recommend setting automatic payments (also known as auto-pay) to the last date of billing cycle. I cannot emphasize this enough. (Actually, I can here if you think I’m joking)

But if you prefer to physically press send payment on your credit cards, you need to make it a habit to make payments every pay day. It regulates spending without having to worry about a big balance at the end of the month.

3. Why did my credit card company increase my credit limit automatically?

There are two reasons:

  • Your spending habits aren’t questionable

  • You demonstrate the ability to make payments on time

The company’s way of saying thank you for being responsible with credit.

4. What kind of credit card should I use?

Invest in a rewards-based credit card that matches your lifestyle and spending habits. Think cashback, credit card points and travel rewards.

5. What’s the difference between a revolve and a charge credit card?

Charge cards have the statement balances that need to be paid in full by the due date to avoid any late or penalty fees.

Revolve cards have an assigned interest rate where you can carry over a balance into the next cycle without a penalty. As long as the minimum payment is paid each cycle you're set.

6. Should I pay the statement balance and my total balance by the due date?

Your total balance is the amount of money you owe from most previous and current billing cycle. However, prioritize paying the statement balance by the due date to avoid paying any fees or interest.

7. What should I be looking for in my first credit card?

Pretty easy. No Annual Fees, no FX fees, the ability to earn credit card rewards, and additional card benefits that fit your spending habits.

Remember, credit card rewards are future savings on purchases. Rack ‘em up.

8. Do I always have to pay interest?

You required to pay interest if you carry any part of the statement balance into the next billing cycle. A really good way to avoid this is to pay off the statement balance before the due date to avoid paying any additional money.

9. Which credit card score matters most?

FICO score > Vantage Score #period

To check your reports, pull your scores from the 3 major reporting companies to get a range since different lenders will use different companies to access your credit information.

$hmoney tip: Visit to pull your free reports today.

10. When is the best time to open up a new credit card?

There’s no better time than right before a high-spending season to be in a better position to receive the welcome offer bonus.

11. Does my APR rate ever change?

Annual percentage rate (APR) rates are considered variable which can change any minute depending on what's going on in the economy. Basically, if the market interest rates are fluctuating, your APR will change too. Other factors that determine APR rates is assessing individual credit risk, which can also fluctuate overtime.

12. My credit card has a promotional APR. WTF is this?

For a certain period of time, a promotional APR rate allows you to carry over a balance without paying for interest.

But listen, don’t get too comfortable with the promo period. Make sure to continue paying off your balance in full each month to avoid a big balance at the promo period and start accruing interest. #Facts

13. How many credit cards should I have?

From my experience, I’d recommend at least two. One for recurring bills and one for every day and big purchases.

It increases the number of accounts reporting to your credit history, which will increase your total credit limit for a higher credit utilization.

$hmoney Tip: Set an automatic payment to pay off your credit cards using a stress-free system to manage your money.

Final Thoughts

Building good credit in your 20s is a crucial step towards financial independence. By understanding the basics of credit cards you can develop a solid credit score that will help you in the future. By following these tips and tricks, you can avoid the pitfalls of bad credit and set yourself up for success in the long run. It’s time to enjoy the benefits of having access to strong credit!

Learn How to Manage Your Credit on Auto with a free chapter from the YGB$ bundle

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