If you step back and think about it for a moment, college seems like a downright lousy time to start building good credit. For all too many students, the college years are a time to amass a mountain of student debt while not working. Building the solid credit history that allows you to get home and car loans at reasonable interest rates is something to put off until after graduation, right? Not necessarily. In fact, in the not too distant past, credit card companies tried to entice every student within a Frisbee’s throw of a college green to signup for entry-level cards by offering perks like free airline flights. While that practice was a way for lots of undergrads to demonstrate they were ready for the adult responsibility of repaying their debts – and hence establishing good credit – it also resulted in too many young people drowning in credit card debt. It was an unpopular enough marketing tactic that the Credit CARD Act of 2010 largely eliminated those campus credit card promotions. But the fact remains that it is better to get started building your credit sooner rather than later. And there are still ways to begin constructing the sort of stellar credit that lenders want to see while still in college. If you are asking the question about how to build credit as a college student, here are a few tried and true methods:
- Obtain a secured card: Unlike standard credit cards, secured cards are easy to get because they require applicants to deposit money into their account before they spend a penny. That deposit amount becomes the card holder’s credit line, which makes it a risk-free proposition for the company offering the card – if you don’t pay your bill, they keep your deposit. But if you are smart and pay off all of your charges on-time it can be a great tool for burnishing your credit.
- Open a gas or department store account: Like secured cards, department store or gas cards are a snap to get compared to traditional credit cards. And if you use it wisely – meaning you always pay your bills before they’re due – you’ll be sending a message that you reliably pay off your debts.
- Get a credit card: True, the days of having multiple credit card offers stuffed in your campus mailbox are over. But if you have a part-time job and an existing relationship with a bank through a checking account and debit card, you just might be able to land a credit card. If you can swing it, do it. And this will sound like a broken record, but be sure to always pay your bill on-time and don’t get anywhere near your credit limit. Small, smart purchases that you pay off on a monthly basis will make a very good impression.
- Hit up your parents: If you’re in college, your parents have clearly already done a lot for you. But if you think they’d be open to one more request, try to get them to add you as an authorized user of their credit card account. You won’t have complete control over the card, obviously, but it is a tool for building credit. If, that is, you use it wisely.