Guest Article by Alayna Pehrson – Digital Marketing Strategist at Best Company
College students are often focused on deciding what career they wish to pursue in their future. Although college is designed for planning for a career, students should also think about their financial future, specifically their credit scores. Here are a few tips that college students can follow to start building credit.
Do your research
According to Statistic Brain, the average age at which people receive their first credit card is 20. Since many students start attending college at the age of 18, the majority of students come to college without a credit card in their name. Researching credit cards and building credit is a good idea for any student. Due to the negative reputation that credit cards often carry, some students may be afraid of using a credit card. However, credit cards can be a great tool to effectively build credit. To be financially savvy, college students should know how to properly use a credit card, learn to understand credit card terminology, and research different credit cards to find out what each card has to offer.
Become an authorized user
One of the fastest ways to build credit is to become an authorized user on someone else’s card. In a college student’s case, a parent or reliable relative may be the best option, depending on the quality of their credit. By becoming an authorized user, students will inherit the history of the card owner’s account on their credit reports. The real benefit of being an authorized user is that students will have a great credit history under their name as long as the card owner continues to maintain good credit usage. Basically, students can get great credit by not even having their own card. Although this method is a useful way to achieve good credit, students should still consider getting their own credit card to learn successful, independent credit building.
Open a credit card account
There are hundreds of credit card options, and choosing one option can be a challenge. Some students may find difficulty getting approved for a credit card, so opening a student credit card might be a good option. Although student cards often have low limits, they are designed to be a good introduction into the world of consumer credit. Initially, students should open only one credit card; opening too many accounts at once can hurt their credit.
Create a budget
Creating a budget can help students maintain financial stability, as well as ensure that they don’t max out their credit limit. Exceeding a credit limit can definitely hurt a student’s credit. Because some students may feel concerned about credit card bills, sticking to a budget will lessen stress and give students a more structured introduction to using credit.
Use your card wisely
Knowing when and how to use a credit card is essential. A good rule of thumb is to treat a credit card like a debit card. To do this, students should use their credit cards to pay of smaller, recurring expenses like groceries or online subscriptions. Once the credit card is used as payment, students should try to pay it off as soon as possible to avoid getting into credit card debt. Paying bills on time is one of the most important factors in using a credit card to build credit.
Know how to protect your card
Although using a credit card can be safer than a debit card, implementing security precautions is a good idea. Students should avoid sharing their card information with others, be cautious when they are making online purchases (use reputable sites only), keep their card in a safe place, and keep an eye out for any fraudulent activity. Identity theft can occur anytime, anywhere. Knowing the proper way to report identity theft and what security measures to implement can save students time, money, and stress.
Understand your options
Although students can learn how to use credit cards efficiently, many will still struggle with building credit. This could be attributed to being overwhelmed by debt, accidentally making late payments, or even the daily stresses of life that can interfere with personal responsibility and wise decision making. College can be a stressful time and some students may find that they have low credit score despite their best efforts. One of the best options to repair bad credit is hiring a professional credit repair company. The best credit repair services will teach good credit-building habits, help dispute items on credit reports, and give people a second chance to build good credit.