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How to Build Credit While in College

Just like a college degree, good credit can create financial possibilities you only ever dreamed of. But unfortunately, starting to build credit in college can be a bit tricky if you don’t know where to get started. If your goal is to graduate with good credit, keep reading to learn 5 different ways you can achieve that.

5 ways you can start building good credit as a college student

1. Off-campus students can use rent payments to build credit

Showing you’re able to make monthly payments in full is a great way to build credit. And what’s more consistent than a monthly rent check? Though rent isn’t typically reported to a credit bureau, there are companies that offer services to help make it count. 

Check out PayLease or Rent Track to get started. Keep in mind these services will charge a small fee, either per transaction or a monthly charge, and your landlord must be registered for you to use it.

2. Get added as an authorized user

If available to you, ask a parent or guardian to make you an authorized user on their credit card account. This is an easy way to start building your own credit with all the benefits of having your own credit card, minus any of the actual legal responsibility of paying it off. 

Meaning you’ll have access to the primary cardholder’s credit limit, plus any other benefits their card comes with. 

Of course, you’ll most likely have to work out a payment schedule with your parents, (but we’ll let you figure that out).

You also don’t actually have to use the card to benefit from the activity going towards your credit score because it’s linked to your parent’s or guardian’s account.

Make sure that the credit bureau issues authorized user reports so it will appear on your credit report.

3. Get approved for a student credit card

The majority of credit card issuers understand how important it is for students to build credit, and pay for daily expenses (which in school, you know there are a lot of). For this reason, credit card companies have student credit cards that may offer specific perks, like:

  • They don’t require any previous credit history to apply
  • Some offer school-related benefits, like cash back for good grades
  • Other perks can include increasing your rewards rate if you make payments on time

Just like you would for a class, do your research and figure out what company makes the most sense for you before applying.

Watch video: Credit Cards in 1 Minute: Everything You Need to Know 

Another option: get a secured credit card in college

Similar to how a debit card works, a secured credit card is backed by your cash and paid in the form of a deposit. 

This is another option for building credit if you don’t already have a credit history (or your credit score isn’t where you want it to be). Everyone is almost always guaranteed to be approved because it’s supported by your own money. 

The deposit you put down will act as part or all of your credit limit. Secured credit cards are different from debit cards though because the activity is reported to a credit bureau. 

Warning: applying for too many credit cards at once can hurt your credit score!

It’s a great feeling to be approved for your first credit card —  but, as tempting as it might be to get another (and another), it isn’t’ the wisest financial decision. 

Applying for multiple credit cards in a short period of time is a red flag for credit card issuers. It’s also not great for your credit score, because each application takes a hard inquiry into your credit history, which will lower your credit score (although, not permanently).

Consider that multiple inquiries make you look like a risk to credit bureaus. Plus, not to mention the more credit cards you have, the more possibility of debt in the future. 

Stay smart and stick with one credit card for now, you can always apply for another when you’re ready.

4. Have someone cosign, if they are willing

The keyword here is willing. We stress this because, when you open an account with a cosigner you are the primary cardholder, but your cosigner is responsible for any missed payments or debt. 

This can make it difficult to find someone because there are always risks involved, and missed payments on your behalf can hurt their credit. However, it’s a great way to build credit because everything will be in your name.

Just make sure to ask someone who you already have a lot of trust with! 

And in case you didn’t know, the Credit CARD Act of 2009 prevents students who are under the age of 21 from getting a credit card, unless they demonstrate an independent means for repaying the debt or have a cosigner.

So, if you want to move forward with getting your own card, depending on the type of card, you’ll most likely need to ask someone to cosign — student credit cards and secured cards are much easier to get approved for.

5. Keep track of your spending

Once you have a credit card, it may seem like you can now buy anything you want. But keep in mind that in order to build good credit, you have to only need to keep the account active according to the issuer’s terms.

This could mean that you only need to buy something with your credit card once every three months — plan to spend (and pay back) what you can afford. Here are three helpful tips for keeping track of your spending:

Know your budget – it’s too easy to get into debt.

First things first, create a budget for yourself. This is even easier with Money Sensei™ — a free tool we built to help you keep track of your spending.

Your budget should include everything you have to spend money on, from rent, utilities, food, school expenses, and of course, extra-curricular activities. Then, figure out which of these spending categories you can use your credit card to pay for.

For example, maybe you know your rent comes from your checking or savings account, but you use your credit card for all the new books you’ll need for each semester.

Deciding this ahead of time and sticking to it will keep all your funds organized and ensure you don’t overspend.

Your payment history affects your credit.

Having a credit card means being responsible with your credit limit, not spending as much as you can. 

Try to manage your credit card similar to how you would a debit card–only buy what you know you can 100% pay back. This will ensure you keep up with your bills, keep your card active, and maintain your credit score in a good place.

Monitor your account and credit score activity

Monitoring your credit card statements is essential to keeping up with your purchases, rewards, and bill due dates. Most times this can be done easily online when you open an account with your credit card company. 

Frequently log in to check your transactions and current balance. This will also help you catch any suspicious charges made on your account. You can report them immediately and avoid anything that could negatively affect your credit score.

Want to learn more about building credit? Checkout our Credit Resources in our Library for more tips and info!

Frequently Asked Questions

“Will student loans help me build my credit?”

Yes. All student loans, both private and federal, will appear on your credit report and count towards your score. So, if you show you can make consistent and timely student loan payments, your credit score will reflect that. 

“How much do I have to spend on my credit card to build my credit in college?”

And the magic number is… only what you can afford! Overspending — using too much of your credit limit or missing payments — will end up negatively affecting your credit score. 

So, stay within your budget, and know you can hardly use your credit card at all and still build credit. It’s all about making those payments in full and on time.

“What if I don’t get approved for a credit card in college?”

If you don’t get approved for a credit card, don’t be discouraged. Sometimes, the problem is an easy fix, or you can simply apply for another form of credit. 

Start by reviewing your denial notice. It will explain exactly why you weren’t approved, such as you have too many hard inquiries on your credit report or you have insufficient income. Use that information to start improving your credit situation and hopefully you can qualify for a card in the future. Then, explore other credit options such as a credit builder loan, store credit card, or a secured card.

Abigail Masterson

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