How Can College Students Build Good Credit?

College is certainly a rocky time financially for most young adults, and credit cards can have a potentially devastating impact on one’s financial future, impacting the ability to purchase one’s first home or to refinance student loans.
If you are a college student, how can you begin building good credit habits and to build your overall credit score?

One of the first things you need to do is change your mentality about money. Remember that any sort of credit that is extended to you is not free and must be repaid with interest if you don’t make payments in full each and every month. Using credit responsibly involves having good judgment and being very practical with money.

If you are not the type of person who can use credit effectively, it may be better than to simply not use it all. But if you do think you can be responsible, the first thing you should do is go to your local bank and ask for a credit card.

The offer is that are sent to you in the mail or the recruiters on college campuses typically offer high interest credit cards with bad terms. Your local bank can usually offer you a much better deal.

Next thing you want to do is to charge your monthly expenses to your credit card every month but also to pay it off. You want to use your credit card in much the same way as you would a debit card, spending only the money that you actually have. This way you will not accrue any interest payments and will improve your credit score over time.

If you are living off campus, you may want to see if you can have the utilities or the rent in your name, because this way you will build building a track record of performance, and you’d be surprised how little time it takes to actually start the building a good credit score.

Remember that it is important to start building good credit early, because it does take a while to build up, and when you have found the home the joint purchase, you don’t want to wait another two years just to build up a sufficient credit history. In addition, you will be able to get much more favorable terms with banks and lenders when you do decide to finally make a large purchase.

Be responsible and only use money that you actually have and you can use credit to your advantage, which will separate you from 95% of the other people out there who believe that a credit card is their own personal ATM.