Don’t Wait Until You Graduate: You Can Start Building Your Credit Score in College

Credit card tips

One of the simplest ways to get started building up your credit score is to get a credit card. Under the Credit CARD Act, you have to be at least 21 years old to have a credit card of your own unless you have a co-signer or proof of independent income. With that in mind, here are some pointers on how to best use credit cards as a student.

Don’t apply for multiple cards at once

If you’re just starting out in the world of credit cards and are eager to get your first one, know that the “shotgun approach” won’t work. Applying for a bunch of cards all at once is a bad idea. New inquiries make up 10% of your credit score, according to FICO.

So be careful — a whirlwind of applications will only hurt your score.

Use your card and pay off the balance

In order to build up your credit, you have to actually use your card; just getting it and filing it away won’t help you.

One of the best ideas for someone just looking to build their credit is to use your new credit card for small purchases that you can easily pay off.

Ideally, you should use your card for things you can already afford and were going to pay for anyway, like groceries.You can even compare rewards credit cards and find one that gives you points or cashback for the things you need or that you purchase regularly.

Use your card for what you need, then immediately pay off your balance to establish your payment history. And paying off your full balance each month, rather than carrying a balance from month to month, will prevent you from having to pay interest.

Become an authorized user on a parent’s card

You might be a little too young or not ready for the responsibilities of having your own card. A good step you can take before fully wading in yourself is being added as a secondary user on a parent or guardian’s card without it affecting your credit.

Becoming an authorized user means you can use their card to make purchases, but they’re ultimately responsible for making payments. But this can actually build your credit too because many credit card companies (but not all) report activity to an authorized user’s credit report too.

So as long as you and your family member use the cards responsibly, you can start to build your credit by using a parent’s credit card.

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Other credit-building tips

There are other ways to establish and build your credit beyond just getting a credit card. So if you don’t have a lot of extra income as a student or can’t get approved for one, there are still ways to build good credit.

Pay your bills on time

Just like with credit cards, paying your bills on time affects your credit. So making sure those internet or phone bills are being paid in prompt fashion will also help you establish good credit. Even library fees, various school fees and traffic fines can hurt your credit if they go unpaid.

For some students it’s not about the lack of credit score. If you already have some loans and credit cards and missed payments are hurting your credit score, consider a debt consolidation loan if you’re finding it difficult to keep up with all of your expenses and monthly payments. This might be a good option if you are a mature student with existing debt going into college.

Don’t let having roommates hurt your credit

You might have some rad college roomies. But if you’re living off-campus and have utilities and other services in your names, then these can affect your credit as well. If your name is listed on any bills, have a house meeting and make sure they’re paid on time. If you move out make sure your name is removed from all relevant accounts.

Failing to pay those shared household bills in full and on time can hurt your credit score, which could affect your efforts to move your life forward financially after graduation. You shouldn’t let the habits of your otherwise wonderful roommates prevent you from getting a new apartment, a car loan or even a mortgage down the road.

If you need a car, do your research

Wheels are important if you are commuting to school, an internship or your part-time job. Finding an affordable auto loan could make a huge difference when buying your own car. If possible, building your credit score for the first year or two before you get an auto loan will help you get a better rate when you do apply.

You should also make sure you shop around and compare insurance rates to make sure you’re paying the best price possible.

Protect against identity theft

One particularly 21st-century way that your credit score can be damaged without you even knowing is online identity theft. If someone is taking out credit cards or other loans in your name that can and will hurt your credit score.

To prevent this try to avoid using public computers or unsecured wireless networks, like in coffee shops or libraries, to pay bills or shop online.

Minimize your risk by keeping your social security card, banking info, I.D. and other crucial documents safe and secure at all times.

You can also look into a protection service that helps you guard your account from data breaches when you do things like you shop online.