Today’s Millennials are tomorrow’s homebuyers, and while most understand the importance of building credit, many are unsure how to do so.

If you are a Millennial preparing to get a mortgage for a new home, you should begin building credit as soon as possible.

Not only will establishing good credit help you secure low interest rates on your mortgage, but it will also lay the foundation for a healthy financial future.

Good credit and low interest rates mean more potential savings, access to additional lines of credit and even better insurance rates. You can begin building your credit today by following these simple tips:

DO

1. DO ask your landlord to report your on-time rent payments to the credit bureaus. If not, your rent payment may not count towards building your score.
2. DO use a card with low interest for small purchases, and pay it off in full each month.
3. DO create a strategy to pay off your student loans in full and on time each month – this information is recorded on your credit report.
4. DO fix late payments as quickly as possible. Everyone makes mistakes from time to time – but soon as you realize one is late, promptly pay it off. If proper action isn’t taken, the delinquency could affect your credit report for up to seven years.
5. DO take advantage of free credit reports each year. It is important to actively monitor your credit in order to achieve good financial health. You can receive one free credit report each year from any of the three credit bureaus.
6. DO be patient. Acquiring healthy credit doesn’t happen overnight. There are no shortcuts to establishing good credit, but your long term investment in your credit health will pay off down the road.

DON’T

1. DON’T skip a utility bill payment, as deferred payments are factored into your report.
2. DON’T purchase a car you don’t need. Millennials are purchasing cars at a much earlier point in life than their parents or grandparents. Be frugal with your purchase and save the luxury, fully-loaded car for when you are more financially stable.
3. DON’T sign up for credit cards in exchange for trinkets like a free t-shirt. Those cards often have low credit limits and relatively higher interest rates.
4. DON’T carry a big balance, even if you’re able to pay it off. Your score falls when you use more than 30 percent of your available credit.
5. DON’T close out your old credit cards. Closing unused or inactive credit cards can reflect negatively on your credit history. Instead, keep unused credit cards open and use them for small purchases that you can pay off quickly and easily.

Your credit score plays a crucial role in achieving your financial goals. With a healthy score and responsible credit use, it’s possible to establish credit and achieve good financial health that will set you up for a lifetime of financial wellbeing.