It’s easy to be carefree about money when you are young and in your 20s and early 30s as the burden of having to pay back the money doesn’t seem so great. But as more responsibilities rest on your shoulders as you think about settling down, getting married and starting a family it can all add up.

We’re now in the throes of a technical recession which means the country has experienced two consecutive quarters of negative growth. Times are tough and jobs are scarce, particularly for the youth. It’s difficult to make ends meet and even though you may have a steady job there is a risk of you losing it as companies consider how they will cut costs.

Building sound creditworthiness is vital if you expect to have a good standing for the future.

“We encourage youth to attain financial independence by spending responsibly while managing any accumulated debt well,” says Keith Wardell, commercial strategy director at Experian South Africa.

As a South African youth – defined as those under 35 years of age and comprising of students, graduates and young professionals ranging from entry to mid-level – you may find the need to take on more debt as your disposable income or financial support from parents or guardians shrink.

But with this debt burden, you need to arm yourself with knowledge and know what your credit rights are.

These are some important tips that you should be aware of in order to build a good credit standing:

  • Make a point of paying bills on time – paying debt late not only accrues interest on bills – and increases your repayments – but can also be detrimental for your credit profile. This may put you in bad standing when needing to make big purchases on credit in the future. If you are unable to pay a bill on time, rather contact the bank or clothing store directly and make alternative payment arrangements. Letting it slide, indicates a stronger likelihood that you will make late payments again or be unable to repay debt in the future.
  • Review your credit report regularly and know your credit score – it is always a good idea to pull your credit report regularly to check for any errors – and ensure your financial health is in good shape. This is especially important before making big purchases as it gives you a view on whether you are in a good position to commit to payments.
  • Don’t take on debt to improve your credit rating – there is a common misperception that the more credit you have, the better your credit rating. This is not true if you mismanage your debt. Debt should only be taken on if you are in a position to service this well and make repayments on time.

It’s so vital to be careful in your youth with your finances and the money you borrow because things could change in a flash and result in you falling behind with your debt. This could have lasting impacts in your 40s, 50s and even beyond in retirement. “Don’t allow the debt of your younger days to follow you in life. Managing a healthy credit profile and knowing your credit rights will go a long way in helping individuals ensure they are in a position especially for making those big purchases one day,” says Wardell.