As soon as you turn 18 years old you are legally an adult. Now besides from being able to hit the bars and party the night away with a cocktail or pint, you are also able to apply for financial products such as an overdraft, credit card and even a loan such as unsecured long term loans and short term instant payday loans providing you have a job.

Although you may have had a job since you were 16 years old, or already have your own bank account and sense of managing money, as an official young adult the way in which you manage your credit now will certainly have an impact on your access to credit in the future.

The problem that many young adults who are employed face is that taking out things such as credit cards, loans and overdrafts can be incredibly tempting especially when you are enjoying more nights out with friends, and wishing to purchase fashionable items such as clothes and phones. Combine temptation, freedom and the fact that you can apply for financial products with a few simple clicks of a button online this can sometimes dangerous resulting racking up debt at an alarming rate, and at a higher risk of damaging your credit rating all before you reach your 21st birthday.

So let’s look at the basics. Each person in the UK has a credit file, which can be accessed by a wealth of parties. Your credit file will be used to determine if you are a credible candidate for any financial products for the rest of your life. For example, if you want to rent a house via an estate agent, not only will they want to see proof of how much you earn to determine if you can actually afford the property, but they will also take a look at your credit file, this is called a credit check. If you have a poor credit rating, which would happen if you have failed to repay a credit card on time for example, or have not paid a loan you taken out the likelihood is that you would be declined for the house you wish to rent.

Other examples of where you would be credit checked include: applying for a mortgage to buy a house; applying for a contract on a mobile phone; applying for a loan or credit card; and even applying for finance to purchase a car. Even if you have failed to keep up with agreed repayments last year for example, and have since kept to your agreement, this will still be seen by those who are performing the credit check, as all of your credit agreements or applications are kept on your credit report for several years.

If you are a party going young adult you may not wish to buy a house for example now, but in a few years you will most probably want to apply for a mortgage, or even buy a new car on finance. If you have been sensible about taking out credit, kept up with repayments then you can do all of these things in the future.

By Jasmina