Wow, I am so glad you are here! Building credit in college is an easy and smart way to prepare you for future investments and financial endeavors. Nothing is worse than getting rejected or denied a loan for something you desperately need only because you lack good credit.
So many college students graduate with poor credit scores or no credit history at all (which can sometimes be worse).
A degree can help you get a job, but without good credit, you may find a great deal of trouble acquiring the car and house necessary to work that job that you accepted a few states away!
Here is a simple and easy strategy to build credit in college! I am going to lay out the steps, benefits, possible issues and explain as much as I can! If this post helps you, or you do not fully understand something and need clarification, let me know in the comments below!
Your Simple Course Of Action To Build Credit In College!
- Apply for a credit card (Most require a down payment and co-sign from a parent or guardian for new users, especially if you are under the age of 21).
- Ensure that you have some type of income or assistance with the future credit payments (a simple part-time job will work great or if you have a family member who is willing to help with small expenses, that is perfect as well).
- Make small consistent purchases with the credit card (Choose one small purchase such as gas or groceries every other week).
- Pay off the credit card on time, and make your other payments on time as well (rent and student loan payments can contribute to your credit score, which is why many students graduate and do not realize that they have built a bad credit score until it is too late).
- Check your credit score online to keep track of where you are at (there are plenty of different sites available, or you can inquire through your banking institution).
- Apply for a new card with a lower interest rate, higher minimum and more rewards (after a year or two of use).
- Enjoy life with great credit!
Why Is Building Credit Before Graduation Necessary?
College is an amazing time to build your credit score! The four years that you spend in college can bring amazing changes that set you up for your entire future if you take action, but those four years can also be detrimental if you do not use them.
Time is our greatest resource, and while the stresses of school can be high, it is still worth the effort to seek self-improvement, independence, and the acquiring of skills. It is “not just a degree” after all.
By building credit during college, you can be confident that you can acquire loans after you graduate! Not only will you be able to acquire large loans for a vehicle or place to live, but your interest rates will be lower and opportunities will open up for you!
You will receive better deals and rewards programs! Businesses will trust you more! Banks will trust you more! Many of your potential worries will be off of your shoulders and you can focus on creating the life that you want!
Why It Is Easier Than You Think!
It is as simple as getting a credit card, making purchases like you normally would, and paying off the card on time!
Doing this consistently will build your credit.
For example, if you typically get one or two Starbucks coffees each week, (hypothetical you caffeine junkie), why not use your credit card and then pay those purchases off at the end of the week with the money that you were going to spend on them anyway?
To make it effortless, you can set automated payments so that your checking account gets billed a few days before the cutoff each month and you don’t have to worry about missing a payment!
Additionally, if your parent or guardian is a co-signer, they may be willing to also help you with certain purchases! For example, if you get certain agreed upon grades, maybe they will be willing to take care of your gas for a few weeks! Each paid off purchase will slowly build your credit!
Another interesting option is for your parent or guardian to put you as an authorized user on their credit card. While you may never use the card, some banks report the purchases and credit history built on that card as partly yours! So you can be building credit off of your parent’s purchases as well!
Paying off your loans and rent each month can help you build your credit score in college and you were going to have to do that anyway! This depends on if your leasing manager reports to certain institutions, but regardless, err on the side of caution and make your payments on time. It can only help to do so!
Before you know it, you will have set yourself up with a great foundation of credit across a few years!
What Problems Can Arise
Applying for a credit card making payments on time can be intimidating. Here are some potential problems to look out for so that you are not caught by surprise!
When applying, you will most likely need to make a down payment or security deposit. This is because the bank does not yet trust you to be able to pay off your purchases. These deposits can range from $100 to $500, so be prepared.
The initial deposit is often the maximum amount you are allowed to spend with the credit card. While this makes sense for the fact that the bank is covering themselves in the case you cannot pay them back, it can be quite frustrating if the card is for “emergencies” and your emergency happens to be more than $500 (replacing tires).
Student credit cards can be easier to open and can bring better “benefits” for students such as cash back and rewards for groceries, but they often have very high interest rates because once again, the bank does not yet trust you.
If you make large purchases on the credit card, you could be digging yourself a hole because it will be more difficult to pay off at the end of the month. I urge you to only make small and consistent purchases so that they amount you must pay is not overwhelming and easy to keep track of.
To Conclude, Don’t Forget…
A credit card is a tool! It is up to you to use it correctly and set yourself up for future success!
Use it for small and consistent purchases like gas that you can already pay for. Don’t buy anything with the credit card that you could not buy without it!
Pay off the card on time and set up automatic payments if you know you are not the type to remember (you’ll be busy in college anyway!).
Building credit in college is simple and necessary! It helps to teach financial discipline which will carry you through the rest of your life!
A credit card can also be a life saver when emergencies arise and you do not have the cash on hand to deal with them. It definitely was for me when I had certain automobile issues after an accident and did not have any cash on my person.
If this post helped you, please let me know in the comments below! If you think it could help someone else, please share it! And if you haven’t seen my post on the keys to college success, definitely check it out!
I am here to help you achieve success in all areas of life! Please let me know if there is a topic that you want covered!
Conquer College and Dominate Life!
Make this school year your best year yet! It’s your life! Live it!