5 Smart Credit Moves for College Students

Building good credit is a necessity in today’s society. Credit cards are used for insurance, loans, apartment rentals and countless other things. The problem is, you need to start using credit to build credit. You aren’t gifted with a high credit score the minute you come of age. However, using credit can get you into trouble if you’re not careful. Here are five tips to guide you if you’re looking at building credit in college.

1. Get a Credit Card

Due to recent legislation, credit card companies are less predatory about offering students cards these days. You can still get one, though. You might need a co-signer, but getting a credit card with a low balance remains the easiest way to build up your credit. Check out who offers the lowest interest rates and talk to your parents about co-signing.

2. Pay off Your Balance Each Month

This is incredibly important. You need to pay off your balance for two big reasons. One is that if you don’t you’ll start accruing interest on your (probably minuscule) purchases, and then you’ll wind up paying more for them than they were ever worth.

The second is that you’ll build bad credit if you don’t pay off your balance. Your credit score measures how likely you are to pay back or pay off anything you owe or borrow. If you don’t do that on your first credit card, you’ll pay for it.

3. Don’t Co-Sign for Anyone

If you’re an older student and a younger student asks you to co-sign them so they can get a credit card, run away. Run away and don’t look back. It is incredibly risky to co-sign for someone when your credit might be high, but new enough that it could still be ruined with one or two mistakes. Tell this person to see their parents for co-signage. Otherwise, you could be on the hook for their financial mistakes.

4. Pay All Other Bills on Time

Your credit score isn’t just based on your use of credit cards. It’s also based on how quickly you pay your other bills. Your utilities specifically will be taken into account when your credit score is calculated, as will any bills that get sent to collections. If you want to build credit in college, try and pay everything on time, and avoid late payments that might be caused by overextending yourself.

5. Avoid Multiple Accounts

It may seem tempting to get multiple cards if you’re eligible, but there’s really no reason to. If you’re not approved for a high limit, there’s probably a good reason. College students don’t have a lot of money, nor are they called upon to make large purchases beyond education. Whether you plan to go to Berkeley University or want to earn a sports management online degree from Adelphi, don’t need multiple credit cards. If you have them, you probably won’t be able to pay them off.