Building credit is almost as important as your GPA in college. Almost.
A part of becoming financially independent is having a healthy credit score. Credit lenders use the three-digit score to estimate how reliable you are. Scores can affect how much you pay for auto-insurance, auto-loans, mortgages, and even jobs! Credit scores open many doors for your future and it’s easy to get started.
Get your own credit card
Back in the day, credit card companies lined up in the quads providing treats for students who sign up that day. Nowadays, you’re probably being sent letters in the mail from many credit card companies. Credit cards are an easy way for college students to build their credit. Go shopping and making monthly payments on your credit card will build your credit history.
Be an authorized user on your parent’s accounts
An option for students who are not eligible to apply for a credit card. Not all college students are over the age of 18. Being an authorized user on your parent’s card eliminated the issue of not being a particular age.
Pitching this idea: Ask your parents if they can put you on their credit card account. If they are not sure based on your spending habits explain that you do not need a credit card. In this case, you will not be able to spend money from this account, although you are an authorized user. Adds credibility with your parents and credit points to your score.
Pay off your balance each month
Nothing can hurt your credit more than not paying your credit card bill. Credit cards have fees that apply if you do not pay on time. These fees add to your credit balance each month you do not pay the entire bill. This lowers your credit score each time.
Don’t apply for multiple accounts at once
Each time you apply for a line of credit lenders will produce inquires on your credit score. Hard inquiries are for mortgages and car loans. Soft inquiries do not decrease your credit score as much. Multiple inquires drops your credit score down a few points. No matter your approval.
Apply for a credit card at your bank
There is a better chance of being approved at your bank than other credit card companies. Your bank knows your financial history better, making them more lenient with your approved amount.
Pay your bills on time
One bill that you pay each month is your rent. Not all rent payments are recorded with a credit bureau however there are some companies that help you track your payments.
Choose the right card for you
When choosing a credit you should consider the APR% on the credit balance due. Credit card rates are generally high starting from 10%. Credit card companies also offer perks such as free credit scores and fraud protection.
Get a secured credit card
A secured credit card is a credit card where you deposited your own money that you eventually borrow. People who do not have the credit or bad credit benefit from this option. These payments provide information to credit bureaus
How do I Build My Credit as a College Student?
Buying a home has always been a goal of mine. Whether it was to pursue my interest in real estate investment or to start a family. I knew that I needed credit for a home loan.
After expressing this concern to my parents we came up with a game plan. I bought a car.
The experience was so surreal, picking out something that was going to be all mine. Instead of going towards my dream car, I decided to opt for something more realistic in price.
This was going to be my first-ever loan meaning my rates were going to be through the roof. We had to be smart about this decision.
Making continuous payments has boosted my credit from non-existing to good.
Using this method has also provided me leverage in getting a credit card. I applied for a credit card with my bank and I was instantly approved. Usually, credit lenders do not provide unsecured credit lines to people my age. This was the icing on the cake. I didn’t have to put money down!
I am careful about how I use my credit card. I only use what I can afford. Unless its a life-or-death, the sky is falling emergency. (This hasn’t happened, thank God!)
Hopefully, these tips on building your credit as a college student were helpful!
Being young is already hard enough, coupled with learning the ends and outs of the world. I am here every step of the way. Stay tuned to see how I work my way through adulthood.