Let’s face it – building credit is not high on your excitement list when starting college. You’re probably more interested in getting into classes than you are about credit scores. But now is the perfect time to begin thinking about building credit because a strong foundation now will make life much easier in the future when you plan to consolidate student loans, purchase a car, or even purchase a house.
A credit score is basically a numerical representation of your creditworthiness. Your credit score is used by banks, lenders, phone companies, landlords, employers and others, and tells them what the likelihood is that you will pay your bills and pay them on time.
The earlier you start building credit, the better off you will be when you are ready to use that score. Here are five ways to start building good credit while in college.
1. Get a credit card
You can apply for a credit card through most banks and credit unions. Choose a card that’s right for you though. It’s a good idea to find a card that offers fraud protection. Low rates and no annual fee are important for students on a budget as well. So do your research to find a card that’s right for you.
If you aren’t able to qualify for a credit card on your own, you could ask your parents to make you an authorized signer on one of their credit cards. This way, you will start building credit by piggybacking on their good credit.
2. Don’t apply for multiple credit cards
Applying for multiple cards at one time negatively affects your credit score. Rather than applying for many different credit cards, find the one or two that most interest you and apply for those only. Remember to look for a low rate and no annual fee.
3. Use it and pay it off each month
A credit card sitting in your desk drawer does you no good, nor does a credit card that carries a high balance. The best approach is to use your credit card periodically for small purchases, then pay off the balance in full each month, on time. This establishes good habits and contributes to a positive credit score.
4. Check your credit report
Watch your credit score grow. You can check your credit report from the three credit reporting agencies once per year through annualcreditreport.com. This is provided to you at no charge by the federal government. It’s a good idea to space out the reports available to you from the three agencies throughout the year.
5. Choose reliable roommates
Often overlooked, choosing reliable roommates is important. If you are renting a house or apartment together and your name is on the lease, then you are responsible for all expenses just as much as your roommate. This includes electricity and water. If your roommate doesn’t pay their portion, you are still responsible and any late payments will show on your credit report.
Building credit through responsible habits is not difficult. If you keep at it, following these few steps to get you started, you’ll have good credit in no time at all.