If you’re a college student, it’s likely that you don’t have much credit history. This can be frustrating when you try to apply for an apartment or a credit card and are turned down because you don’t have a strong enough credit score. Luckily, there are a few things you can do to start building your credit while you’re still in school.
Why Do You Need to Build Your Credit?
Your credit score is one of the most important numbers in your financial life. It is a three-digit number, ranging from 300 to 850, that reflects your credit history and current credit health. The higher the score, the better. A good credit score can help you get a mortgage, buy a car, and even get a job. A bad credit score can make all of those things more difficult or even impossible. That is why it is important to start building your credit history early on. A strong credit history will help you get the things you want and need in life.
What Affects Your Credit Score?
There are several things that can affect your credit score. Some of these factors are within your control, while others are not.
One factor is your payment history. This includes whether you make your payments on time and if you have any missed or late payments. Another factor is the amount of debt you have. If you have a lot of debt, it can impact your credit score.
Finally, the type of credit you have, the length of your credit history, and whether you have any recent inquiries on your credit report can also affect your credit score.
Who Determines Your Credit Scores
Your credit score is a critical piece of information that lenders use to determine your eligibility for a loan. But who determines your credit score?
The three major credit bureaus – Equifax, Experian, and TransUnion – are responsible for calculating your credit score. Each of these credit bureaus use a similar method in calculating credit scores.
While the three major credit bureaus are the primary determiners of your credit score, other companies can also play a role. For example, FICO, the company behind the most widely used credit score model, uses information from the three major credit bureaus to create its own scoring models.
What is a Good Credit Score for a College Student?
A good credit score for a college student is one that is above 650. This score indicates that you are a low-risk borrower, which will make it easier for you to get a loan or open a line of credit. A score of 650 or higher will also help you get the best interest rates and terms on any borrowing you may need.
Tips to Build Your Credit as a College Student
In order to establish good credit, it’s important for college students to start early and make a habit of using their credit wisely. Here are nine tips to help you build your credit.
Get a credit card.
If you want to start building your credit history, the best way to do it is by getting a credit card. A credit card is one of the best ways to start establishing a credit history because it shows that you can handle borrowing money and repaying it back on time.
Make all of your payments on time
Making your payments on time is really important if you want a good credit score. This includes things like your credit card payments, student loan payments, and any other type of debt you might have. Your payment history is one of the most important factors in determining your credit score, so it’s important to make all of your payments on time.
Keep your credit card balances low
If you use too much of your credit limit, it can hurt your credit score. This is because it makes you look like you are not able to handle your money well. A good general rule of thumb is to keep your balances below 30% of your total credit limit.
Check your credit report yearly
You should check your credit report at least once a year to make sure there are no mistakes. You can get a free copy of your credit report from the three major credit bureaus – Equifax, Experian, and TransUnion – once every year.
Use a mix of different types of credit
Having a mix of different types of credit – such as a credit card, a student loan, and an auto loan – can help improve your credit score. This is because it shows that you’re able to handle different types of debt responsibly.
Don’t open a lot of new credit accounts at once
Opening a bunch of new credit cards or taking out a bunch of loans can actually hurt your credit score. This is because it can make you look like you’re borrowing more money than you can handle.
Keep your old credit accounts open
Even if you don’t use them, keeping your old credit accounts open can help your credit score. This is because it shows that you have a long history of responsible credit use.
Pay off your debt
Having a large amount of debt can hurt your credit score, so it’s important to try and pay it off as quickly as you can. If you’re having a hard time making your payments, you can always contact your creditors to try and work out a payment plan.
The most important thing to keep in mind is to be responsible with your credit. That means only borrowing what you can afford to pay back and always making your payments on time. If you do that, you’ll be on your way to a great credit score in no time.
Building credit as a college student can seem like a daunting task, but it’s important to do so in order to establish good credit habits early on. By following the tips we’ve outlined in this post, you can start building strong credit that will serve you well in the future!