Final answer:
To improve your credit score at age 18, obtain a credit card, preferably from your current bank, and consistently pay off the entire balance each month.Option a is the correct answer.
Step-by-step explanation:
One easy way to start improving your credit score when you turn 18 is to get a credit card from a bank and pay it off each month (option a). This demonstrates to lenders that you're responsible with credit and can manage regular payments. When looking for a credit card, it's beneficial to start with your own bank, as they may offer cards tailored for those with limited credit history. Department store or gas station credit cards might also be an option; however, they often come with higher interest rates, which is the cost you incur when carrying a balance from month to month.
It's important to not only make the minimum payments but to pay off your balance as quickly as possible to avoid the compound effects of the interest rate. Consistently paying all your bills on time and using a modest amount of the available credit are key strategies to improve your credit score. Credit allows you to borrow money for purchases like an automobile, and being responsible with this borrowed money, which includes timely repayment, positively affects your credit score.
Credit history is crucial when taking out loans, such as an auto-loan, as it influences loan approval and the monthly payments. According to market data, despite many Americans managing to pay their credit card balances on time, a significant portion still carries balances, incurring billions in interest charges annually. It is also noted that credit card debt and the behaviors around it have direct implications on Americans' financial health.