Being at college is a wonderful experience and one of the parts of growing up is becoming financially independent. However, amidst the studying (and no doubt partying) learning to make sound financial decisions can be challenging for some.
In order to secure a mortgage, loans or any other future credit, building good credit is essential and poor credit histories can even mean you might struggle to be secure cell phone contracts or it could even cost you your dream job!
Don’t worry just yet though because help is at hand; here are our top tips for building your credit score as a college student:
Get your own credit card
Although things may have changed slightly since the days of dorm mailboxes flowing with credit card offers- most college students will still be eligible for credit cards. You might be surprised to know that banks recognise and extend a little bit of leeway for the fact that you don’t have much credit history so it’s worth applying to find out how they can help.
Some college credit cards feature 1 percent cash back rewards on all purchases, and those rewards increase to 1.25 percent when you make your payments on time. Having your own card will also help build credit history and open other potential access to investment or loans in the future.
Pay off your balance
When you first start off your attempts to build good credit, try your best to carry zero balance on the card. Only really use the credit card on things you can afford, and pay off any remainder at the end of the month.
Responsible usage and paying on time will quickly build your credit history and it will also encourage the bank to keep your account open (they can sometimes close accounts after a period of inactivity).
If you want to make small purchases then the best approach would be to put small recurring payments on the card. For example, you may have a movie subscription service that charges a few dollars a month- transfer this to your credit card and you should have no problem paying that amount off each month.
Pay other bills
It’s important never to neglect other bills, particularly utilities fines or taxi. You should only ever spend what you can afford and organise your monthly expenditures so you have enough to cover any credit card payments. If used correctly, credit cards can act as a tool for you to develop a strong financial foundation.
Review the company
Always pay close attention to your chosen credit card provider and make sure to read reviews and source information from a variety of places. Also, be careful to read the terms of what you are agreeing to and clarify information on interest packages and rewards so you know exactly where you stand.