Why is building positive credit important?

Woman paying with apple pay

Without building a positive credit history* many things in life will be more expensive, and in some cases, even unattainable. While opening a credit card is the easiest way to start building up your credit, it can also be costly if you don’t use your card wisely. A recent report from Experian revealed that the average millennial owes $4,899 in credit card debt.

Step was built to help today’s teens avoid these common pitfalls with a mission to improve the financial future of the next generation by teaching them smart money habits at an earlier age. Building and maintaining a positive credit history and credit score is a critical part of that financial foundation. Having a positive credit score unlocks access to more favorable financial terms, saving you money. Here are a few examples that have a big impact as you become independent from your parents:

  • Cell phone plans: Having a positive credit score can mean the difference in getting the best rates on a cell phone contract versus having to accept a more expensive prepaid plan.

  • Car insurance: In many states, you will pay more on monthly car insurance premiums if you have bad or no credit history.

  • Applications for employment & rentals: Your applications for employment and rentals can be denied based on having a bad or no credit score –– holding you back from getting a job or apartment as you head off to college.

  • Credit cards: While credit cards offer rewards and benefits to customers with positive credit scores, most students have little to no credit history. This means credit cards available to students often have the highest interest rates and fees.

  • Student loans: On a typical student loan the difference between no credit score and a positive credit score can cost you thousands of dollars in interest on comparable loans.

  • Personal loans: Many students use personal loans to cover the cost of books, a computer or part of the tuition that student loans may not cover. Without a positive credit score you might have to settle for a higher interest rate or in some cases, you may not be approved at all.

Unfortunately, traditional banks don’t help you build positive credit without using potentially risky or predatory lending and credit products. Step offers a new, safe way to build and maintain positive credit –– before you turn eighteen. The Step Card gives you the security to never overdraft or overspend with the added protection and benefits of a credit card.

Here’s how it works: Your Step Card is a secured Visa credit card with advanced features. When you make a deposit into your Step deposit account, you then have the ability to spend up to that amount with your Step Card. Each time you use your Step Card, Step secures that amount from your deposit account. Through Step Smart Pay you can have Step automatically pay off your bill every month with your secured deposits. This creates a positive credit history. Step has created these products to help lead the next generation to a brighter financial future.

*Positive history, as identified here, is reported on and related only to your Step Visa card activity, subject to your account remaining in good standing. Step will report your activity to Transunion®, Experian®, and/or Equifax®. While we report positive credit history here, your credit history and score may be impacted by your activity outside of your Step Visa card, as credit histories and credit scores are built by credit bureaus based on a number of factors, including the financial decisions you make with products outside of the Step Visa Card.

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