Building Credit As A College Student

I don’t know about you but financial literacy was not a requirement for me to graduate from high school, nor is it for college. Without the knowledge I need to succeed financially in the real world, I have in a way been set up for failure. If it wasn’t for my parents and the internet, I would have probably made a bad financial decision by now and been in a lot of trouble. Lucky for me, I now have the tools I need to succeed on my own post-college and now its my turn to help someone else. While you may still feel unsure about some of these financial topics like taxes, mortgages, budgeting and debt management, I am going to give you a few suggestions on how we can tackle the issue of credit and begin building good credit as a college student. 

Make payments on your student loans while still in school

If you are not sure what a credit score is, it is a number, usually between 300 and 850, that measures your ability to repay debt. The higher the number, the better the score and paying these loans off can help that go up. Not only will you be building credit, but you will also be tackling the loans early and leaving yourself with less to pay after you graduate. 

Become an authorized user on your parent’s credit card

Being an authorized user allows you to use someone else’s credit card. Although you're not the primary cardholder and therefore not responsible for the payments, failure to pay on time will still affect your credit negatively since you are a user as well. Therefore make sure you pay off the charges you are responsible for to help them stay up-to-date with all payments.

Open your own credit

If you feel like you are responsible enough and up for the challenge, apply for your own credit card. If you are under 21, you can still open a line of credit but will probably need to have a cosigner. Many companies have credit cards specifically made for college students (which I will list below) with some pretty cool features and offerings. With this card comes great responsibility so always practice safe spending habits and never put more than you can afford on the card, even if your limit allows you to. 

Make payments on time

If you already have a credit card of your own, it is important that you form good habits as to how you manage the account. The most important thing to do is make payments on time because timely and consistent payments improve your score. It is good practice to always pay more than the minimum amount due and whenever you can, try your best to pay as much as you can, if not all of it off. 

Avoid opening multiple accounts at once

As a college student, we do not need 100 lines of credit open. This can negatively affect your score and reduce your approval rates for future credit and loans. People who open multiple accounts in a short amount of time can be seen as risky borrowers, placing a major red flag on your name. One credit card , maybe two, is enough to start off with and will help you build credit while also learning how to manage it. 

There are tons of other credit cards specifically tailored to college students but I figured I would just highlight a few!

Discover it Student Cash Back 

Annual Fee: $0

Regular APR: 12.99%-21.99%

Intro APR: 0% on purchases for 6 months

Cool Benefits: Earn 5% cash back on rotating categories that you activate and 1% on all other purchases. $20 statement credit for students with a GPA of 3.0 or higher. 

Journey Student Rewards from CapitalOne

Annual Fee: $0

Regular APR: 26.99%

Intro APR: N/A

Cool Benefits: Earn 1% cash back on all purchases which can increase to 1.25% every month you pay your balance on time. You can pick the monthly due date that works best for you. Increase your credit line by making your first 5 monthly payments on time. 

Bank of America Cash Reward Credit Card for Students

Annual Fee: $0 

Regular APR:13.99%-23.99%

Intro APR: 0% for the first 15 months

Cool Benefits: $200 cash reward bonus after making $1000 worth of purchases in the first 90 days. Earn 1% back on purchases, 2% back on groceries and 3% back on the category of your choice (gas, online shopping, dining, travel, etc.)

Citi Rewards+ Student Card

Annual Fee: $0

Regular APR: 14.49%-24.49%

Intro APR: 0% for first 7 months

Cool Benefits: Double the points on grocery and gas purchases.Earn 2,500 bonus points if you spend $500 within the first 3 months. Shop with points at Amazon and Best Buy. 

Wells Fargo Cash Back College Card

Annual Fee:

Regular APR: 11.15%-21.15%

Intro APR: 0% for first 6 months

Cool Benefits: 3% cash back on grocery, gas and drug store purchases for the first 6 months. Can use cash rewards on travel, gift cards and other merchandise of opt out for cash redemption. 

Good credit can open the door to tons of financial opportunities. From renting an apartment, buying a house or financing a new car, you need good credit to secure the lowest interest rates possible. The earlier you begin your credit journey, the longer your credit history will be and the higher your score. So what are you waiting for? Start now and begin your journey to AMAZING credit. Be sure to comment down below your favorite credit card and what you like about it!

xoxo,

LD