How to Successfully Build Credit as a College Student

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  • You’ve got a lot on your plate.

    Like picking the perfect courses for your major and putting together a schedule that won’t overwhelm you.

    Then actually passing your classes so you can graduate on time.

    Your credit score is the last thing on your mind when you’re just trying to enjoy the best years of your life.

    Building your credit is vital for the future, so you should be paying attention to it right now. Lucky for you, there are some ways you can successfully build your credit as a college student.

    We’re going to show you five ways to build your credit in college, so you’re set up when graduation comes knocking.

    1. Become an Authorized User

    If you’re not comfortable getting your own credit card, you have another option. Become an authorized user on your parent’s or other family member’s credit card.

    Just make sure they’re cool with it first!

    By becoming an authorized user, you are essentially using someone else’s good credit to give yours a boost. It’s something young people have done for years, and you will see it recommended pretty much everywhere.

    The difference between getting a credit card and being an authorized user is where the responsibility falls.

    While you can use your parent’s credit card under your own name as an authorized user, they are still entirely responsible for the payments. They also have complete control over your spending.

    This goes both ways, though.

    If for some reason, the owner of the credit card misses a payment or maxes out the card, your credit could take a hit just the same as theirs. You really have to trust whoever you’re teaming up with here.

    It depends on what level of control you like to have over your finances.

    2. Get a Credit Card

    The best way to build your credit is to go ahead and get a credit card of your own.

    But how are you supposed to qualify for a credit card when you have no credit or, worse, bad credit?

    We’ve got just the thing for you! A secured credit card is an ideal way to start out your credit journey. Yes, you will have to put some money down beforehand, but it’s totally worth it.

    With a secured credit card, you are basically paying for your credit line. You’ll pay either $49, $99, or $200 to have a small line of credit you can borrow from.

    That way, if you end up being unable to pay your balance and have to close the card, the company doesn’t lose out on any money.

    No matter what kind of credit card you decide on, it’s crucial to do your due diligence. Dig into the details and get to know what you’re signing up for. Otherwise, you may get caught off guard.

    3. Use Your Credit Card Responsibly

    It’s not enough to own a credit card if you’re not using it the right way. And yes, there absolutely is a right way to use your credit card!

    Only use your credit card for small, occasional purchases. These are things you know you will be able to pay off fairly quickly. You must keep your balance at zero or as close to zero as possible.

    Never use your credit card for large purchases unless it’s an emergency.

    Don’t just leave your credit card sitting there, though. If you don’t use it, you risk having the account closed. That doesn’t help your credit at all.

    You’re trying to make it clear that you can use your credit and use it responsibly.

    Using your card for things you know you can quickly pay off is the best way to build your credit. Know when your statement runs so you can make sure your balance is at zero before it reports to the major credit bureaus.

    It may take six months or so, but you’ll start to see your credit score on the rise!

    4. Use Your Rent to Build Your Credit

    You pay your rent on time every single month, but that good history of paying your bills doesn’t come into play with your credit.

    We think it absolutely should. After all, your credit score is a reflection of how responsible you are with your money.

    You will have to jump through a few hoops to get your rent reported on your credit. There are reporting services that will send the good word of your payments to the major credit bureaus for you.

    These services do usually require a monthly fee to use, and it can be dependent on your landlord as well. Unfortunately, it’s not the answer for everyone.

    But if you’re serious about building credit, using a rent reporting service is a helpful way. You can boost your credit score using the money you are going to spend anyway.

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    5. Apply for a Credit Builder Loan

    As the name implies, a credit builder loan is a loan you take out specifically to build your credit. It’s an excellent option for you if you have some income to spare each month to put toward building your credit.

    Instead of getting the funds from your loan upfront, the amount sits in an account by the lender while you pay it off.

    Every month, you make your loan payments just like you would on any loan. At the end of the agreed-upon term, you get the money you invested.

    You make timely payments on your credit builder loan. Then the loaner reports this info to the major credit bureaus, and — hello, good credit! And because you haven’t actually received the loan yet, the bank isn’t losing out on any money.

    Just be sure you’re able to pay the loan on time every time. That’s the key to making it work!

    Note: These kinds of loans are generally only available through smaller financial institutions.

    In Summary

    Even though you’re focused on your schooling, it’s still entirely possible to build your credit while you’re in college. And it’s something you absolutely should be doing!

    Follow best practices when it comes to your spending. Use your credit as a tool to help you and not a way to have a good time, and invest in yourself and your future.

    You’ll feel amazing when you see how quickly you can build on that solid foundation.

    Author Bio:
    Karen Lein is the General Manager of Copper Beech Townhomes and Grove San Marcos. She is a Fresno State alumna and enjoys traveling and watching football. #GoDogs

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