Never Too Early to Start: How to Build Your Credit During College

Your college years are some of your most formative and this is true even for your credit history. As a college student, you probably have several responsibilities on your plate at the same time – whether they're commitments to extracurricular activities, classes or friends. Getting used to having financial commitments is also key to growing your credit score now and in the future.

In recent years, it has become harder for young adults to obtain new lines of credit and loans due to stricter regulations so establishing your credit early on could make a huge difference in your chances of being approved. While you might think you have plenty of time to increase your credit score after college, there are plenty of chances for you to start even sooner than that.  

Here are ways to build your credit in college:

Become an Authorized User for a Credit Card
While regulations have made it harder for college students to be approved for a credit card, you could become an authorized user on your parents' credit card. Although you wouldn't be responsible for paying the credit card bills, being an authorized user allows you to increase your credit score at the same time as your parents. If your parent has a history of on-time payments, this will be positively reflected in your credit score as well. 

Begin with a Secured Card
When you want to take control of your own financial future, consider applying for a secured credit card. With a secured card – which acts as a combination between a debit and credit card – college students can gradually build up their credit without being seen as a risk to lenders. First, you'll have to put down money that will act as collateral and your spending limit. A secured credit card will increase your credit score if you choose a financial institution and card that is reported to the three main credit reporting bureaus. This type of card also has the advantage of restricting your spending to make sure you do not go overboard. 

Pay All Your Bills Promptly
You are probably busy with school work to think about bills, but a history of on-time payments is crucial to growing your credit score. Getting in the habit of paying bills on time will help you when you leave college, which could limit the risk of you accruing any unpaid or overdue debts. Paying the full balance on bills and credit card balances each month during college could also lower the amount paid in interest rates that could hamper your ability to meet other credit obligations once you graduate. By having a solid history of paying bills on time, you have a greater chance of being approved for your first credit card or loan. 

Get in the Habit of Checking Your Credit Score
Although you might think you should only check your credit history and score once you leave college, this is a mistake that could hold you back. Make sure you get in the habit of regularly requesting your credit report once a year to determine if there is any suspicious activity on your report. This is not only important to protect yourself from identity theft and fraud, but also ensure there are no other mistakes on your history that could impact your ability to be approved for credit cards or loans in the future. 

The spending habits you pick up during college could carry on with you after graduation. Taking the right steps to build your credit history will help ensure you are prepared for the real world outside of college.