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4 Ways To Build Your Credit While in College

Your credit is an important tool in your financial success. Having a high credit score can help you finance big purchases like cars, houses, and college at a better interest rate. In some cases, your credit score can even impact your ability to get a good job. Starting to build your credit as soon as possible will get you off on the right financial foot. Here are four ways that you can build your credit while you are still in college.

1. Take Out Student Loans

Your credit score is based on a lot of factors: how many accounts you have, how old the accounts are, how reliable you are with payments, and how high the balances are. One of the first credit accounts that many young adults get is a student loan. Student loans can be a great credit builder. Your payments will typically not be due while you are enrolled in school (although some loans may require a certain number of credit hours to pause payments), but your accounts will continue to grow older each month. Having older accounts on your credit report can boost your score, as it shows a history of reliable repayment.

2. Open a Credit Card

Credit cards are also good ways to start building credit, as long as you handle them responsibly. You’ll want to find a card with a good interest rate. Read the terms of any potential card closely before signing up. Some cards may come with surprise fees or extra-high interest rates if you miss a payment. If you aren’t able to sign up for a credit card on your own or if you are worried about the risk, you may be able to become an authorized user on a parent’s credit card. That will let you start building your credit right away.

3. Pay Off Debts

The age of your credit accounts is important, but having a history of reliable payments is just as important. One of the best ways to do this is to make small purchases on your credit card regularly and then pay off the balance each month. A recurring purchase that you already budget for, such as a monthly subscription fee for an app, is a great option. This is money that you would already spend. By putting it on your credit card, that expense helps build your credit payment history.

4. Watch Credit Reports

Your credit score is calculated by everything that is on your credit report. When you apply for financing for a purchase, the lender will pull your credit report. It’s important that you keep an eye on your reports to make sure that everything is accurate. You are entitled to a free credit report from each of the three credit unions every year. Additional credit reports can be purchased for a small fee. You can also use credit monitoring websites to help you keep tabs on your credit throughout the year. If you find any errors, be sure to address them promptly to keep the mistake from affecting your overall credit score.

Building your credit history while you are young is a great way to ensure a successful financial future. The age of your accounts, as well as your payment history, are both important factors, so starting early with reliable payments can help improve your score. Keeping your credit report error-free will also help. Always read the terms and conditions of any loan or credit card carefully to make sure that you can agree to them. Defaulting on loans or credit cards will negatively impact your credit score. Following these guidelines will help you graduate with high honors on your credit score.

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