With exams to study for, friends to hang out with, and activities or clubs to enjoy, students often forget about an important component in college: building their credit. Admittedly, college is busy and full of new experiences. Yet, it’s the perfect opportunity to begin your credit journey. Establishing a strong credit history during your college years benefits you in the future. It can lead to more favorable interest rates on loans, or even help you land your first apartment or job. Read the personal experiences from nine students on how to build credit as a college student.
1. Become an authorized user
Becoming an authorized user on someone else’s credit card account is a common way to build credit as a student. This is often done through a parent who is responsible with their credit card. Once you’ve chosen a person you trust, you both need to communicate and agree on how you’ll use the card. Gissel, a Marquette University student, shares how she uses this method to boost her credit score in college:
“I plan to build credit as I progress through college by becoming an authorized user on my parent’s pre-existing lines of credit. Because my parents have worked tirelessly to create good credit scores, doing so will enable me to start building my own credit without having any major or legal responsibilities to pay off debts. Furthermore, by starting off as an authorized user, I would have the opportunity to grow my credit score from any activity on the account without having to personally use the card.”
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Gissel Z. Marquette University |
2. Pay your bills on time
Payment history is one of the most important factors in building your credit score. When you pay your bills on time, you show lenders that you are responsible and worthy of more credit in the future. A Muskingum University student set up automatic payments to ensure he’s never late again:
“To build good credit, I made a plan for myself. It started with having recently acquired my first credit card. I am fortunate to have it and don’t have a lot of money, so I am therefore very responsible when it comes to using it. One thing I know is that I must always make my payments on time! One way to ensure this is to put payments, no matter how small, on autopay so I can set them and make sure they’re made by the due date.”
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Max E. Muskingum University |
3. Think of your credit card like a debit card
There are many differences between debit and credit cards, but when it comes to building credit, treating the cards the same could benefit you. By only purchasing an item if you have the money in your checking account, you can ensure you’ll be able to pay your credit card bill without incurring interest charges or late fees. University of Central Florida student Zeidy shares her methodology for building credit:
“I'll utilize my credit card to make minor purchases that I know I can pay off. At times, purchasing a higher-priced item can lead to missing a payment or paying late, which will have a negative impact on my credit score. It is best to only make purchases that I know I can pay off. With a credit card it's extremely easy, yet very difficult to monitor every single swipe, so thinking of it as a debit card is a great way to keep my spending in check.”
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Zeidy A. University of Central Florida |
4. Monitor your credit utilization ratio
Your credit score is also influenced by your credit utilization ratio, which measures how much revolving credit you have used in relation to your credit limit. Keeping your utilization ratio low can show credit card issuers you aren’t overly reliant on credit. Hunter from the Georgia Institute of Technology keeps an eye on her credit utilization as part of her credit-building strategy:
“Aiming to utilize no more than 30% of my available credit, I will also make sure to maintain a low credit usage rate. This will demonstrate my prudent spending practices and keep me from racking up unneeded debt…I'm convinced that I can build a solid credit history during my college years if I follow these tips and practice financial restraint.”
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Hunter W. Georgia Institute of Technology |
5. Check your credit report often
A credit report is a summary of your credit history, including any loans and credit cards you have ever had in your name. A positive report leads to better financial opportunities, while a negative report can create obstacles. Luckily, if you believe there is an error with your credit account, you can file a dispute to correct the issue. Ethan, a University of Oklahoma student, identifies and addresses issues before they can negatively impact his credit score:
“I intend to review my credit report often. This periodic self-assessment will help me spot any inaccuracies and correct them promptly, avoiding potential dents in my credit score. This approach is like revising before exams, catching potential weaknesses, and remedying them quickly.”
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Ethan G. University of Oklahoma |
6. Use your student credit card responsibly
Using your credit card responsibly involves being picky with your purchases and making timely payments. For example, when you use your card for a variety of expenses in the same month, you should aim to pay the full balance rather than settling for the minimum payment. New York University student Emma outlines her approach to maintaining responsible student credit card habits in college:
“While in college, I plan on using the credit card for big purchases of items I might need in college. For example, I bought my desk that I will use for all my schoolwork with my credit card. I immediately paid it off as soon as the statement showed up in my account. By practicing this, I can ensure that I pay off the full amount of my credit card statement every month and never be late for a payment ever again.”
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Emma B. New York University |
7. Educate yourself on all things credit
Schools often lack comprehensive financial education, which usually means you have to find other ways to learn. Whether through financial podcasts, books, or blogs, you can improve your financial literacy on your own. Amber from the College of Charleston shares how credit education helped build her credit score:
“I then took it upon myself to continue learning the details of how to build a credit score. My all-time favorite resource is a video on YouTube entitled “Credit Cards 101: How to build your credit score ASAP and leverage your money” by Graham Stephan. In conjunction with the information from my dad, I learned about the variety of factors that impact my credit score: total accounts, length of credit, inquiries, utilization percentage, and on-time payments. Consistently paying on time and keeping my utilization rate low have allowed me to reach a ‘Very Good’ score at the age of 20.”
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Amber A. College of Charleston |
8. Make payments towards your student loans
If you don’t have a credit card in college, you might be wondering how you can establish credit. Luckily, paying student loans does build credit if you make regular, on-time payments. A student attending the Franciscan University of Steubenville shares how he pays for his education while simultaneously building his credit history:
“While student loans are an ongoing concern for college students, the good news is that these loans can also serve as another way to build a credit history. Showing the ability to pay off student loans is another way to build up credit and show companies that I am trustworthy in regard to financial matters. Similarly, paying a car loan responsibly is another good way to build credit.”
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John Paul M. Franciscan University of Steubenville |
9. Live within your means
While on campus, students are exposed to dozens of new trends, many of which involve significant expenses. By avoiding financial peer pressure and understanding your own limits, it’s possible to cut out unnecessary costs. One effective tool is a secured credit card, which assists in promoting financial accountability. Jenna, a student from the University of Wisconsin- Milwaukee, offers her experience in understanding her personal financial boundaries:
“Another method I will be taking with me through my college years is to know my limits. It can be tempting to go beyond your means and buy flashy new things you cannot afford. It is essential to resist this temptation, so you do not drown yourself in debt. Maintaining a solid payment history is essential for building good credit. Having a credit card can be intimidating, but with the right steps, it is a great asset.”
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Jenna E. University of Wisconsin - Milwaukee |
While there isn’t a single best way to establish good credit in college, these strategies are a great place to start. It doesn’t matter if you're a brand-new freshman or a seasoned senior, it’s important to make some time in your busy schedule to focus on building credit in college. When you graduate, you’ll have both your diploma and solid credit history in hand. This history will serve as a testament to your financial responsibility and make a strong case to lenders when you’re ready to purchase a car or secure financing for a house.
