I’m graduating from Highschool next year and want to buy my first rental property within the next 3–5 years(maybe less but that is doubtful).
I currently have no established credit. Would starting with a credit card (used responsibly and paid in full monthly) be the best way to build credit for an investment property loan?
Also, for someone just starting out, what would you focus on first? I’m trying to build a strong foundation early and would appreciate advice from those who started young.
Credit cards are tricky in the sense they must be opened and active with a balance to keep the score building each month. You never want to pay off a credit card when starting out instead you want to keep a small running balance. You can use the 35% credit limit to balance rule as it seems to be most helpful.
Use your card monthly and make (2-3) smaller payments each month but keep the balance low and not paid off. Example if you have a credit card with a $1000 credit limit use the card rack up what ever you need but make sure you have it paid down each month to $350.00 or less but Not paid off.
Credit cards are like a revolving door the longer you keep the low limit over the "Months revolving" the higher the score. It does take time unless you have a parent who will add you to one of their cards as an "Authorized user" (Only if they have low balance and ZERO late payments in the last 5 years).
Avoid credit cards with an annual balance if possible Capital One seems to have a few that offer cards with lower scores or students.