How to Build Credit as a College Student and Graduate with a Top Score

While you’re in college, you’re probably dreaming of post-grad life when you’ll find a nice job, buy your first house, and get a nice car. Of course, you’ll want to live the good life after all those years studying!

With your credit history affecting not only whether you can borrow money but sometimes even if you can get a job, getting a head start on increasing your credit score is a great idea.

If you’ve never had a credit card or loan before, you might not know where to start. With factors like your payment history, types of credit accounts, debt owed, and credit history length helping to determine your credit score, there’s a lot to consider. But don’t worry!

Keep reading and we’ll show you exactly how to build credit as a college student.

1. Get a Credit Card

If you’re wondering how to build credit as a student, getting one credit card that you can use wisely is a good place to start. 

If you’ve got some source of income, such as a part-time job at your college, you may qualify for your own card. While there are credit cards specifically for students from major banks, you can find regular cards with attractive perks like reduced interest charges and rewards.

Otherwise, you might consider asking your parents to make you an authorized user for one of their credit cards. This card will be in your name, though your parents will also share responsibility if you were not to pay. This might make some parents reluctant.

In either case, your account balance and payment history will report to the credit bureaus. As you pay your bills on time, you’ll see your credit score rise over time.

While you may be tempted to open multiple cards, this is not a wise idea. Starting with a single card lets you reap the benefits and convenience of having a credit card while also reducing your chances of getting into deep debt.

2. Use Your Card Wisely

The best way to build credit with a credit card is to charge only necessities and pay off your balance each month. This means avoiding the temptation of buying that expensive new cell phone or taking your friends out to that costly concert.

However, life and emergencies do happen, so there may be times you have to carry a balance over time. The key is to watch your card’s payment date closely and pay at least the minimum payment. Remember that interest can add up, so paying as much as you can each month is highly recommended.

To avoid late fees that hurt your credit score, you can set up autopayments from your bank account or create an alert on your phone to remind you each month before the due date. 

3. Avoid Other Large Debts

While we’ve already discussed avoiding excessive card debt, you should remember that other debts like car loans and student loans impact your credit score. 

It’s true that having a mix of credit like personal loans and credit cards can help the credit mix portion of your score, which makes up 10 percent. But the amount of debt owed actually makes up a whopping 30 percent of your score!

Student loans may be a necessity for getting your education. However, if you’re looking at how to build credit in college, pay attention to how much you borrow. Taking out student loans for the minimum needed for tuition and board, as well as finding extra income sources like a part-time job, can prevent overwhelming debt past graduation and keep your score in a better place too.

Avoiding car loans by buying a cheap used car or finding other sources of transportation would also help keep your overall debt lower. If you do choose a new car, shop around for deals and student promotions to cut your purchase price down.

4. Avoid Late and Unpaid Bills

Late credit bills are not the only thing that can hurt your score. You also have to think about your rent, utility bills, and other loans.

Whether you miss your cell phone payment or forget to pay your car loan, you face consequences other than a shut-off phone line or repossession. You could both face late payment fees and see a dent in your credit score for delinquency. 

In fact, if you do not resolve unpaid bills quickly, your account can go to collections, making your credit score take a large hit. In fact, your payment history alone makes up 35 percent of your credit score!

It’s easy to forget to pay your bills when you’re busy juggling classes and possibly a job. So, creating reminders, taking advantage of autopayment, and writing all payment due dates down will help you manage your bills.

5. Avoid Co-signing for Others

If your partner or friend wants to buy a house or car, he or she might ask you to co-sign for them. This means that if the person doesn’t pay the bill, then the creditor can come after you. This is not a good idea if you want to focus on how to build credit as a college student!

While you have control over how you use debt and pay your bills, you can’t control the person you’ve co-signed for. And unfortunately, bad financial decisions your friend makes can come back to tear down your credit score. This is because the loan will appear on your credit report just as if you had taken it out on your own.

Even if your friend or family member is very responsible and has never missed a bill, still you should beware. All it takes is one late or missed payment to dent your score, and unless you monitor your credit report regularly, you might not even know about the delinquency before it’s too late to resolve easily.

Now You Know How to Build Credit as a College Student

We’ve shown you how to build credit as a college student, so it’s time to take control of your financial future and aim for a top credit score!

Now that you know how to get a credit card as a student, start exploring options that work for you and avoid the pitfalls of charging too much and missing payments. At the same time, take on as little extra debt as possible and avoiding co-signing so you can keep your credit history clear.

If you have had any financial issues and are interested in credit repair to improve your score, be sure to check out our blog.