Tips to Build Credit While You’re in College
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 on one of their credit cards. Becoming an authorized user can help you build good credit because you’ll benefit from their good habits of payment history and being responsible with credit.
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 for college students. (Check out our VISA® College Real Rewards Card, specifically designed to help you build credit.)
Use your credit card (wisely).
In order to build your credit, simply having a credit card in your name isn't enough; you’re going to have to use it. No, we don't mean a shopping spree. Using your card wisely can help establish your credit history. Designating small purchases to your credit card that you can easily pay off completely at the end of the billing cycle will help keep your credit score high.
Don’t apply for multiple credit cards.
One credit card should be enough while you’re just getting started in establishing your credit. Applying for multiple cards, especially all around the same time, can have a negative impact on your credit score. Each time you apply for a credit card or loan, a lender submits what's called an inquiry, which pulls up your credit history for them to determine whether they can approve your application. Too many inquiries at the same time, and your credit score will take a hit. Also, having multiple credit cards could put you at risk of overspending and getting into overwhelming debt.
Apply for a share secured loan/credit card.
A share secured loan or credit card 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.)
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 drafted on its due date to help make sure that you don’t miss any payments.
The keys to building your credit are to spend wisely, pay your bills on time, and stay out of debt. We know this is easier said than done, but keeping a budget and only having one credit card will help you stay on track.