Building Credit in College
You are finally out on your own. Not only are you a college student trying to build a career and a legacy for yourself, but you now have the opportunity to start building something else which you will carry with you the rest of your life as well: your credit rating. Here are some helpful tips for building credit in college.
The formula used in this is what will determine how much credit you can get and what your interest rate will be. As with picking the college you will attend, it is crucial that you do a little bit of research into how to properly build and maintain a good credit score, because knowledge is power. Typically a credit card is the first step to establishing and building credit. Secured credit cards require a deposit to be made, which usually becomes your credit limit, whereas unsecured credit cards require no deposit, but determine your eligibility based on your credit score; which if that is low or non-existent, could mean you won’t qualify.
Interest rates might start off high and your credit limit will probably be low. Based on your history of maintaining good standing with checking and savings accounts, you will already have an advantage. Avoid negative balances and you are already on the right track to keep your credit card in good standing. Begin simply with a gas station card, department store card, or even one of the major credit cards and pay at least your minimum amount due every month. Better yet, try to pay off your balance in full! This will greatly impact your credit score.
Letting your spending get out of control can be easy if you don’t keep an eye on your purchases. Sometimes many small purchases can add up to large debt, so be sure to monitor how much you
are spending daily through online banking or your credit card apps. Keep in mind other important factors as well, such as your Annual Percentage Rate (the lower the percentage, the better). Over time, a good credit score will help lower this number. Don’t spend more than your credit limit, which will increase over time with an account in good standing, but exceeding your limit may incur fees and affect your credit score negatively.