Considering how important your credit score is, it’s a good idea to start building it as soon as you can. Here are eight simple ways you can work on your credit score while you go to college.
1. Get a Credit Card
Using a credit card responsibly is the fastest way to build your credit. It’s more difficult to get approved for a credit card when you’re a student, but there are some credit cards intended for those who haven’t built their credit yet. Another option is asking a parent to co-sign on a credit card application.
2. Make At Least One Credit Card Purchase Per Month
Your credit card will only help your credit if you use it and pay your bill. This doesn’t mean you need to go crazy with it, as just one transaction per month will suffice.
3. Pay Bills by the Due Date
When it comes to your credit score, your payment history is most important. All you need to do here is pay your bills on time or early.
4. Keep Credit Utilization Low
Another factor that affects your credit score is the amount of your credit that you use. Never carry a balance larger than 20 to 30 percent of your credit card limit and you’ll be fine.
5. Avoid Co-Signing for Anyone
When you co-sign for someone on a loan, credit card application, lease agreement or anything else, you’re putting your credit score in their hands. That’s not worth the risk, no matter how well you think you know someone.
6. Borrow as Little as Possible
It’s smart to avoid debt whenever possible, and if you do need to borrow money, keep it to a minimum. You may need student loans to pay for college, and that’s alright, but make sure you use that loan money wisely. Don’t be one of the students who foolishly buys a car or other luxury items with student loans.
7. Pay Your Credit Card Bill in Full
Although carrying a balance won’t necessarily bring down your credit score if you’re keeping your credit utilization low, it’s still a bad habit, and you’ll need to pay interest. Aim to pay your credit card off in full every month, because credit card debt can be a serious issue.
8. Don’t Cancel Your Credit Card
Thinking of getting rid of your credit card? That’s probably a bad idea, because how long you’ve had your credit accounts factors in to your credit score. If the card doesn’t have an annual fee, you’re better off keeping it open.
With time and the right financial habits, your credit score will steadily improve. By the time you’re out of college, you’ll be in a much better place financially than the typical student.