Education

How to Build A Credit As A College Student

As a college student, one of the things you’re likely to think about is your future career and how to streamline the transition. First, however, you need to think about building a good credit history in your college years. 

That’s because after you graduate, good credit history can help you in your job applications and when you apply for loans. In this guide, we’ll show you how to establish a good credit score. 

Let’s begin. 

4 Ways To Build Good Credit As A College Student 

1.Make Payments On Your Student Loan While In School 

What the credit score does is measure your ability to pay back your student debt. So, if you show that you’re consistent and make on-time payments, there’s a high chance your credit will improve. 

You can begin your student loan payments before you graduate. Of course, if only you could make the payments. But if you can, you’ll decrease your student loan debt, thus, boosting your debt-to-income ratio. You’ll also develop a good payment history. 

When you graduate, you can use various loan forgiveness like Public Service Loan Forgiveness to help you pay off the rest of your student loans. 

2. Get A Cosigner To Help You Qualify For A Credit Card

One great way to build your credit is to pay off a credit card every month. But it may quite be challenging to qualify for a credit card as a college student. And that’s because the Credit CARD Act of 2009 prohibits students under age 21 from acquiring a credit card. 

 However, there is a way around it, and that is if you can show that you can repay your debts independently or have a cosigner. If you’re currently in school and not working, there’s a low chance of qualifying for a credit card unless you have a cosigner. 

If you get a cosigner, you should make small purchases and pay off the balance each month. This plan can help you build credit in college. However, before you proceed, you have to consider the risks. 

If you miss payments, your credit and that of your cosigner will be in jeopardy. Also, you can easily overextend your credit card since using the card to make payments feels the same way whether you spend $4 or $400. 

3. Use Your Rent Payments To Build Credit

Developing a payment history is essential for building good credit. For example, one bill you probably pay regularly each month is rent. Now, typically, rent payments aren’t reported to credit bureaus, but numerous companies can specifically help you with that problem. 

Businesses such as Rent Track, PayLease, etc., can help you add current and previous rent payments to your credit report to build your payment history. So it’s better to start using your bills to your advantage. Besides, you’ll be paying rent anyway, so why not use it to your advantage? 

However, before you proceed, do your research first. Some services cost money and may require your landlord to participate. And some credit bureaus won’t accept your rental history, so this method isn’t always successful. 

4. Get A Student Credit Card 

There are different types of credit cards available, from cards purposely made for people with long credit histories to poor credit. Now the student credit card programs are designed for particular financial situations and the credit needs of college students. 

Usually, they have lower credit limits compared to other credit cards and flexible requirements. So if you’re in college, there’s a high chance you’ll get approved for a student card, even if you have little or no credit history and income. 

From all the points discussed, you can choose the one that works best for you. First, you can find an online job to help you pay for your college while you’re in school. Then, after you graduate, you can use student loan forgiveness to pay off your loans. 

Final Thoughts 

You can use the four points outlined in this guide to help your credit as a college student. However, you need to do your research to find the pros and cons before you proceed. 

For example, a student credit card can help you get a good credit score. But you have to make sure you don’t make expensive purchases. So you have to use it wisely and avoid spending beyond the limit. 

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