Build Credit In College

Now that the school year is well underway, you’re probably paying a lot of attention to your studies and the more social aspects of college life, like cheering on your school’s football team, but it’s important to keep an eye on your future, too. After all, that is the goal of college—building the foundation for a lifetime of success.

One of the most important areas you need to get right from the beginning—and one many schools don’t devote any time to—is getting started with your financial future. As a college student, your finances may still be somewhat intertwined with your parents’, but this is a great time to establish your own financial identity.

Get Your Own Bank Account

A great way to make progress toward your own financial future is by opening your first bank account—one that’s solely yours and not co-owned by your parents. Investigate various banks and credit unions to decide what is best for your situation. Make sure you understand the difference between a traditional bank and a credit union, to determine which one is a better option for you.

Traditional banks want to maximize profits, whereas, at a credit union, you actually become a member and part owner. A credit union then works for the best benefit of the members, allowing you to get lower interest rates and better terms on loans.

Start Building Credit

Having a good credit score is vital to long-term financial success. It influences nearly every financial aspect of your life from buying cars, finding an apartment, to buying a house. You may not be ready for those milestones yet, but one day you may want to be, so here are a few ways to build good credit while you’re still in college.

Get a Credit Card

In order to have credit, you need to show you can use credit. But be careful—some credit cards have very high interest rates. Sign up for a credit card that is reasonable and offers you benefits. Then use it judiciously, making a few small purchases and paying them off immediately. To avoid any temptations and to help make sure debt doesn’t get away from you, get only one card.

Pay All Your Bills on Time

Do you have rent while you are away at college? Be sure to pay it on time, all the time. While it is not a credit card, paying any bills late can affect your credit score in negative ways. As a young person just starting out, since you have a smaller and simpler financial life, paying just a few minor things late can have a big negative effect on your credit score down the road, whereas getting those one or two things right can have a big positive effect.

Do you have rent while you are away at college? Be sure to pay it on time, all the time. While it is not a credit card, paying any bills late can affect your credit score in negative ways. As a young person just starting out, since you have a smaller and simpler financial life, paying just a few minor things late can have a big negative effect on your credit score down the road, whereas getting those one or two things right can have a big positive effect.

Automate Bill Payments

When opening a new checking account, ensure there is online banking with bill pay available as a benefit to you. Set up automatic bill payments for as much as you can, like rent or student loan payments. This will help ensure that those monthly bills get paid regularly, on time.

Stay on Top of Your Student Loan

If you have a student loan, soon after you graduate, you’ll need to start making student loan payments. Depending on the school you attended, it may be the biggest loan you have to manage outside of a home mortgage. Making that monthly payment is a great way to build good credit very early. If you find yourself struggling to make the payments on time, contact your financial institution. Particularly with student loans, lenders are willing to work with you to ensure you can pay it off. Find other tips about repaying your student loan at our Student Loan Resource Center