3 Easy Ways to Build Credit as a Student

A good credit score is very important

A good credit score is very important when you apply for a car loan, credit cards and in some cases some rental properties will use your credit score as a determining factor in their decision to rent you a place.

The sooner you start building your credit, the more time you have to work towards building a great credit score.

Keep reading to learn how to build credit as a student in three easy steps

Become an authorized user on a family member's credit card

The easiest way for many students to get started with credit is to become an authorized user. To become an authorized user, someone you know and trust such as a grandmother or parent with a credit card can add you to their account. As long as payments are made on time and the balance on the card is low, being an authorized user could help you build a positive credit history and start on the path to a good credit score.

Always make on-time payments, and keep your balance-to-credit-limit ratio low is the only way to make sure your activity improves, rather than hurts, the credit score of your authorized user. 

When I was 17, my grandmother added me as an authorized user on one of her credit cards and it this was a great way to start building my credit form a young age.

 If you want to establish credit with a credit card, don’t have more than one. Choose one card with good rates and terms and pay off the entire balance monthly. Consider using it just to pay for one type of required expense each month so you won’t be tempted to use it to overextend

Creating a budget while in college is a great way to track spending and understand where your money goes. Here’s how you can start budgeting now and work toward your bigger financial goals.

Get your Own Student Credit Card

Once you’re able to open a credit card in your name, this will be another way to build your credit history. A student credit card can be easier to get because the credit score requirements are usually not as stringent as with a prime credit card. Some student credit cards offer rewards like cash back or rewards points which can help you save money on many college expenses.

Be aware that interest rates on student cards can be much higher than the average credit card interest rates so avoid carrying a large balance, which will keep your interest charges low.

In college I always paid off the card balance in full as I wanted to avoid paying high interest rates and didn’t want to use the card as a way to spend money that I didn’t have.

Once you open your first line of credit — whether it’s a credit card or a student loan — you’ll want to manage that credit wisely. Avoid opening multiple accounts at once as students with short credit histories open lots of new accounts in a short period of time might be seen as riskier borrowers than those with long histories and fewer accounts.

Get Credit on your Rent Payments

Paying your rent on time isn’t always reflected on your credit. There are several services that will help ensure your positive rent payment history is reported. Using rent payments is a smart way to bolster your credit score without incurring debt, using money you’d be spending anyways. If you’ve always paid your rent on time and your lease is in your name, it may be worth trying to get it reported on your credit.

The bottom line

Getting an early start on building credit can help you achieve your financial goals before and after graduation, as well as help you obtain lower interest rates in the future. Just make sure to practice smart credit habits, like charging only what you can afford and paying your monthly balance on time and in full.

If you need to repair your credit, there are companies such as CreditNerds which offers a unique, free credit repair service and works with creditors as well as credit bureaus to find and remove negative items on clients’ credit reports. Additionally, CreditNerds provides educational resources along with the credit audit to assist clients with expanding their credit knowledge. 

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3 Simple Ways to Build Credit as a Student