Tips to Build Credit While You’re in College
1. Become an authorized user on a credit card.
One way to begin establishing your credit history is to see if your parents are willing to make you an authorized user one of their credit cards. Becoming an authorized user on your parents account can help you build good credit because you’ll benefit from their good habits of payment history and being responsible with credit.
2. Get a credit card.
Another way to build your credit is to apply for and obtain a credit card. Do your research and find one that’s right for you. Take note of their interest rates, rewards programs, and fees. Don’t just take the first card that says you’re pre-approved. Many companies have cards specifically designed from college students. (Check out our VISA® College Real Rewards Card specifically designed to help you build credit.)
3. Use your credit card (wisely).
In order to build your credit, you’re going to have to use your card. That is not to say go out on a shopping spree. Simply having a credit card doesn’t build your history. But using your card wisely to make purchases can help establish your credit history. Designating small purchases such as gas to put on the card. If you don’t use it, your credit history will have no results to show.
4. Don’t apply for multiple credit cards.
One credit card may be enough for you while you’re just getting started establishing your credit. Applying for multiple cards, especially all around the same time, can have a negative impact on your credit score. Each time a lender looks at your credit, it counts as an inquiry, too many inquiries and your credit score could take a hit. Also, by having multiple cards, it could be tempting for your to spend more and could lead to unwanted debt or more debt than you can handle.
5. Apply for a share secured loan.
A share secured loan or credit card is another option to get started with credit. This type of loan is secured by the funds in a savings account. The funds in your savings account count as collateral towards the loan. As long as you make your payments on time, you will create a positive payment and credit management history. Why not make your money work for you and start building your credit? (Interested in this type of loan? Check out the Personal Deposit Secured Loans that we offer.)
6. Pay your bills on time.
Perhaps, the most significant factor in determining your credit score is your payment history. (Read more about understanding your credit report and credit factors.) Set payment reminders, alerts, or have the payment automatically deducted on its due date to help make sure that you don’t miss any payments.
The keys to building your credit is to spend wisely, pay your bills on time, and stay out of debt. We know this is easier said than done. Keeping a budget and only having one credit card will help you stay on track.