Why Should You Build Credit As A College Student?

Building credit as a college student is important for several reasons. College is the perfect time to start planning for your future and setting life goals. A good credit score can make it easier for you to get approved for loans (student or otherwise), credit cards, and even rental agreements.

Here are the top 5 tips we suggest for building your credit while in college:

1. Get a student credit card: Many credit card companies offer student credit cards that have lower credit card limits and more relaxed approval requirements. This is a great way to build credit quickly, but make sure you are using your cards responsibly. Pay your balance in full each month, as carrying a balance from month to month will result in interest charges that can add up quickly.
2. Become an authorized user: If a parent or family member trusts you and is willing, they can add you as an authorized user on one of their credit cards. This will allow you to build your credit by using their card and make you responsible for paying back any debt that you incur.
3. Pay your bills on time: Late payments can have a negative impact on your credit score, so it’s important to always pay your bills on time. This isn’t just relevant to credit cards, this includes utility bills, student loan payments, rent, and any other bills that need to be paid on a monthly basis.
4. Keep your credit card balances low: The simplest way to do this is by paying your balance in full every month. This means only using what you can afford to pay off. Your credit utilization ratio or the amount of credit you are using in relation to your monthly income, can have a big impact on your credit score. Try to keep your credit utilization ratio below 20%.
5. Avoid applying for too much credit at once: Every time you apply for credit it creates a “hard inquiry” on your credit score, which can lower your report, which can lower your credit score. Try to limit the number of credit applications you make and only apply for credit when you really need it.

By following these tips, you can start building your credit while in college. Keep in mind that building a good credit score takes time, so be patient and persistent. Stick to a budget, pay your bills on time, and be mindful of how you use your credit. Before you know it, you’ll be on your way to a strong credit score.