Remember that “permanent record” teachers held over your head in high school? While it was largely mythical, there is one about which you do need to be concerned.
This one will factor into nearly every aspect of the quality of your life. It will determine things such as whether you can buy a new car or get an apartment. It can also affect whether or not you get certain jobs.
With so much at stake, it’s useful to know how to build good credit while you’re still in college.
Get Authorized User Status
If your parents have good credit, you can piggyback on their respectability by becoming an authorized user on one of their accounts. This gives them the ability to monitor your spending and teach you to use a credit card the right way. Credit reporting agencies consider this ratable usage and your score will reflect it.
Shop Carefully for Your First Card
Gone are the days when credit card marketers showed up on campus slinging hot pizza and cool T-shirts. Federal law prohibits this now. Further, if you’re under 21, you have to be able to show an income to qualify for any credit card. However, you can get a secured card if you have the means to put cash on deposit to offset your potential usage. After you’ve been cool with that for a while, you can get a regular card. When that day comes, look for one with no frills, a low interest rate and no annual fee.
Use it Only When You Don’t Have To
Once you get the card, only use it for purchases you can afford to pay off each month. This helps you avoid paying interest and it demonstrates solid stewardship in the eyes of the reporting agencies. Your score will go up when they see you making purchases and paying them off in full each month.
Decline to Cosign
Yes, we know the very first thing we advised here is to get your parents to cosign. But that’s different. Your parents have trust, respect and family ties to hold over you. Your roommate is liable to default and you can do nothing about it. If you can’t afford to give it, you can’t afford to lend it—and you should never consider giving anyone your good name. It’s a bad idea. If they need help because they’re in debt, recommend they seek the counsel of a company like Freedom Debt Relief to strategize the best way to pay off their obligations and get back in the black.
Pay Everything On Time
Any obligations you incur should be paid before they become due, especially taxes, library fees, and traffic tickets. Don’t overlook utilities, internet service or streaming services. If you’re renting a place with roommates, get new ones if they are slow to pay. To make a long story short, if it’s a bill, make sure it’s paid on or before the due date. All of these types of expenses are subject to being reported to credit agencies.
Manage Your Student Loan Responsibly
Use the funds only for school-related expenses and start paying the loan back as soon as possible. A student loan is a great way to establish your credit score. It gets listed on your credit report right away and is considered to be in good standing as long as it’s deferred—even if you have yet to make a single payment.
These six tips will serve you well when you’re considering how to build good credit while still in college. Basically, you just need to remember to avoid biting off more than you can chew.
Do that, everything else will take care of itself.