Here’s the Beginner’s Credit Mistake That Could Haunt You for Years

Core Insights - Approximately 7 million U.S. adults, or 2.7% of the population, were classified as "credit invisible" in 2020, lacking sufficient credit history to generate a credit score [1] - Building a credit history is essential for financial activities such as taking out loans or purchasing a vehicle [1][2] - Mistaking approval for progress is a common mistake among individuals starting their credit journey [3] Group 1: Importance of Credit History - Many Americans begin their credit journey without any credit history, which can be intimidating [1] - Establishing a credit history is crucial for various financial reasons, especially for young adults or those hesitant to use credit [2] Group 2: Tools for Building Credit - Starting with a secured credit card, where a refundable deposit becomes the credit limit, is a recommended method to build credit [4] - Credit-builder loans can help individuals establish credit by locking in a small loan amount in a savings account, with repayment history reported to credit bureaus [4] - Being added as an authorized user on a trusted individual’s credit card can also help build credit without taking on primary responsibility [4]