4 ways students can build credit


Building credit for the first time can be daunting, especially when you have other things on your mind like finals and figuring out your life. But, a credit history and a good score can make life after school a whole lot easier.

Having a good credit history proves to landlords, banks, credit card companies and employers that you are trustworthy. Experts recommend getting started on it as early as possible. Here are four key tips for building a credit history before you finish school.

1. Get a credit card.
Prepaid cards and debit cards are convenient to use, but they don't help you build credit. The best way to start building credit is with a credit card.

But Roger Douville with A+ Federal Credit Union says it's important to stay disciplined.

"I would recommend that they choose only one credit card to make those purchases that they know that they can pay off at the end of the month," says Douville.

Though the Credit CARD Act of 2009 tightened the rules on filling students' mailboxes with credit card offers, there are still options for students to start climbing the credit ladder. You can get a credit card by:

  • Becoming an authorized user on your parents' card, which will help your credit as long as they use it and pay on time.
  • Having a parent co-sign on a card for you.
  • Getting your own student card if you have even a minimal income while in school.
  • Getting a secured card, which requires a deposit before a credit line can be given.

Pay off the whole balance every month, if possible. It will save you from having to pay interest charges, and you'll still be building your credit history.

"They're getting credit as long as long as that card is open and as long as payments are not late," says Douville.

2. Get a credit builder loan.
Another option for building credit is getting a credit builder loan, which are specifically designed for people with no credit history.

These type of loans are basically a form of paying yourself but in a way that's reported as a loan to the credit bureaus. You either deposit a sum upfront -- say, $500 -- which the bank then uses to extend you a line of credit for that amount. Or you make regular deposits, which the bank freezes until you've reached your loan amount.

3. Don't be late with card payments.
Whether you're using a credit card or a loan, remember to only buy what you can afford and make your payments on time. Not only will late payments accrue interest and late fees, they'll hurt your credit score, too.

College student Aidin Kieffer says after one bad experience with a balance he couldn't pay off, he now checks his available credit, and then gauges what expenses he can afford to charge.

"I'll pay off something like my phone bill for the month and then go from there," says Kieffer.

4. Pay student loans on time.
Keep on top of other bills, too. If you are late paying rent or utilities, lenders could discover that and count it against you.

Once your student loans come due, make sure you're paying them on time as well. They also affect your credit score.

Just like getting that degree, a little patience and discipline can set you on the right path to good credit and an easier life out in the real world.

See related: Credit management 101 for new college students, 8 keys to safe credit, debit card use on campus, How to avoid crushing student debt

Published: September 11, 2015

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Updated: 10-22-2016

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