Establishing credit in college can give you a head start after graduation. You’ll improve your chances of not only getting an apartment but also qualifying for an auto loan and low insurance rates, among other things.
Here are some options to help build your credit history.
Become an authorized user
If you can’t get a credit card on your own, consider asking a parent or other loved one to add you as an authorized user to one of their credit card accounts. Ideally, they’ll add you to an account with a history of on-time payments and a low utilization rate.
There’s no credit check requirement to become an authorized user. Once you’re added, the account and its payment history will show up on your credit report, helping you build credit history.
You may also receive a card linked to the account, but if you decide to use it, you may want to discuss any rules or expectations the primary cardholder has about how you’ll use the card to avoid potential conflicts.
Practice good credit habits
Even if you don’t yet have a credit card or loan, now is a good time to start developing smart credit habits that can benefit you later on.
- Pay bills on time. Your payment history is the most influential factor in your credit score, so paying all your bills on time is crucial. Consider setting up automatic payments to avoid accidentally missing one.
- Create a budget. To create a budget, take a look at your income and expenses over the past few months to get an idea of whether you’re spending within your means. Set spending and savings goals each month and track your expenses to ensure you stick to your budget.
- Limit your credit card spending. The more you charge, the higher your balance runs, making it more difficult to pay it down each month. High balances also raise your credit utilization rate, which can lower your credit score.
- Only apply for credit when you need it. Every time you apply for a credit card or loan, lenders will run a hard inquiry on your credit reports, which can temporarily lower your score. If lenders see too many hard inquiries or new accounts, they might think you’re a high-risk borrower and deny your credit card or loan application.
Check your credit report
Once you begin building credit, you’ll want to keep an eye on your credit report. Your credit report contains a full history of how you manage credit, so it’s important to review it to track your progress and address potential issues as they arise.
For more information on building credit, see the following articles: