Building Credit While You’re in College

| Tedis Baboumian |

As a college student, you’re enjoying a lot of freedom. You’re Trying new things, meeting new people, and not worrying about curfews. But it’s also time to lay the groundwork for your life after college, including your future finances. A good place to start is building good credit.

Your credit history and score will affect whether you’ll be able to get approved for a credit card, car loan, or mortgage. This information may also be looked at when you apply for an apartment or even a job.

What if You Don’t Have Credit?

If you’ve never had any kind of loan or credit line, you’re practically invisible to potential lenders. In certain cases, having no credit is almost as bad as having bad credit. Some ways to get started building your credit include:

  • Secured credit cards. Secured credit cards are geared to people who have poor credit or no credit at all. To get one, you’ll need to place a refundable security deposit, which secures what you borrow.
  • Student credit card. Creditors know that college students have a lot of expenses, and many offer credit cards specially geared to students. This type of card may include perks such as cash back for good grades. Start with a card that has a low credit limit such as $500 so you won’t be tempted to overspend.
  • Credit builder loan. When you have no credit history, you may want to consider this special type of loan which doesn’t require good credit for approval. The funds you borrow are held in an account while you make payments. This means you’re building your savings and your credit at the same time.
  • Authorized User.  Ask someone in your household to add you as an “authorized user” to one or two of their credit cards.  Make sure the credit card has never been late!  Let’s say your parent has a 5 year old credit card with a $5,000 limit after they add your name as an “authorized user” the credit card company will report the entire history of this card to your credit report!  Make sure they add you as an authorized user and NOT joint.

Another option is to get a co-signer. If a parent or someone else you trust is willing to co-sign for a loan, it may help you get approved for credit you couldn’t obtain on your own today. If anyone agrees to co-sign, they’ll be on the hook to make payments if you drop the ball, so be sure you’re ready to make payments as agreed before asking anyone to do this for you.

Taking Charge of Your Credit

Getting an early start building credit can put you on track for reaching your financial goals. Whether you begin with a credit card or a loan, always make payments on time and don’t borrow more than you can afford to pay back. Don’t give in to the temptation to apply for multiple credit cards once you’ve been approved for one. Too many hard inquiries on your credit report in a short amount of time can bring down your credit score.

It’s also a good idea to keep an eye on your credit report so you’ll know about any fraudulent activity as soon as it happens. Dovly offers credit monitoring and improvement services along with other tools and credit education. With a 92% success rate, we know what it takes to make your credit right and help work toward a brighter financial future, so contact us today.

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