15 Jan 5 Ways College Students Can Build a Healthy Credit Score
Many college students start off their adult lives with no or low credit scores. FICO, the credit scoring model many lenders and creditors use, considers 670 or higher to be a good score. According to Credit Karma, the average score for 18-24-year-olds is 630.
It’s a good idea for all young adults to start building a healthy credit score sooner rather than later. Stronger credit scores enable them to achieve a better financial foundation as they go out into the world on their own pursuing jobs, finding places to live, and seeking credit for everyday items, such as cellphones.
Are you a college student looking to boost your score? Here are five ways you can achieve a better score and solidify your credit standing.
1. Check Your Credit History
Checking your credit history is an important step, even if you have no credit history. Unfortunately, child ID theft is skyrocketing and, if you’ve been victimized, the sooner you know, the better. You should obtain a credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion.
2. Open a Student Credit Card
Many banks and credit unions offer credit cards designed for college students to help them get started on building credit. These cards typically come with low credit limits and higher interest rates, but if you’re responsible, it is a good way to establish strong credit and gain access to cards with better terms. Be sure to make all payments on time because if you don’t, you’ll quickly sink your credit score.
3. Apply for a Secured Credit Card
If a lender turns you down for a student credit card, you can pursue a secured credit card. These cards will require a deposit of money to serve as collateral, but each purchase and payment you make on-time will be reported to credit bureaus. Over time, this helps to build good credit and eventually gain access to a regular credit card.
4. Don’t Rely on Debit Cards
Many young adults like to use debit cards because it works like cash and doesn’t build debt, which is a good thing. However, debit card use doesn’t factor into a credit score because it’s not reported to credit bureaus, which is unhelpful if you’re trying to build good credit.
5. Ask for Rent and Utility Payments to Be Reported to Credit Bureaus
Another potential avenue for building credit is to ask your landlord and utility providers if they’re able to report your payments to credit bureaus. This isn’t a sure-fire way, since these services sometimes come with a fee, but it can’t hurt to ask.
Pursuing a better credit score positions you to be more financially independent when you graduate and venture out on your own, helping you achieve a seamless transition to independent living.
Contact Accolade Financial
Paying off loans also factors into your credit history. At Accolade Financial, we help students and their families find the best options to help finance higher education. To learn more, schedule an appointment today.