As a college student, you need to improve your credit. It does not matter if you just entered college or if you are leaving college already, you still must build your credit. Improving your credit will help you qualify for loans, cell phone plans, rental applications, impact job prospects, etc.
When you improve your credit as a college student, it will offer you more options in the financial marketplace. And opportunities to score good terms for loans and credit cards in time to come.
Improving your credit will help you achieve your financial goals as a student before and after graduation. It will also enable you to I think financial products and low-interest rates in the future.
Improve Credit as a College Student
There are a lot of ways you can improve your credit as a college student. Below are some of the steps.
- Become an authorized user.
- Get a student credit card.
- Apply for a secured credit card.
- Keep your credit usage low.
- Ensure you make your payments on time.
- Monitor your credit score.
- Spend responsibly.
1. Become an Authorized User
When your parents or your guardian adds you as an authorized user on their credit card, it poses a good way to improve your credit.
If you are an authorized user, you will have the benefit of your credit card and have a permit to the primary cardholder’s credit limit. But you will not be having any legal right to clear off the debt on the credit card.
2. Get a Student Credit Card
There are some banks that issue student credit cards. But these cards come with a low credit limit and a higher annual percentage rate, than the normal credit card. A student credit card does not require you to have an established credit history.
The student credit card program is modeled to accommodate the credit need and financial situations of college students. As a college student, you are likely to get approved for a student card.
Even if you have a short or a none existing credit history and even if you have a low income. Note that if you are below 21 years, or you do not have a high income, you will need a co-signer.
3. Apply for a Secured Credit Card
If your application for a student credit card is declined for one reason or the other. Or if the student credit card does not fit your bills, you can obtain a secured credit card.
These cards have little risk since it requires you to put in money on deposit to serve as security.
When you use the secured credit card, your payments are reported to the credit bureaus, which then permits you to keep a record of paying on time.
4. Keep your Credit Usage Low as a College Student
Keeping your credit usage low is a great act. This is because it shows your spending power and your capacity to keep your balances low or cleared. And these are great signs for any lender.
5. Ensure you make your Payments on Time
Making payments on time is one great component in determining your credit score. When you start using credit, you will have to ensure you do not miss any payments. You need to establish a good payment habit.
Skipping any payment will bring down your score. And making all your payments on time will give your score an increase. You can also set up an automatic payment through your bank, this will ensure that you do not miss any payment.
6. Monitor your Credit Score
Keeping an eye on your credit score will not improve your credit as a college student, but it will enable you to track your credit score, changes and growth, and activities on your accounts.
You will also correct errors on time before they affect your chance of getting a loan. Also, you will get a breakdown of how you are thriving with the major credit score factors. This can help you improve your credit.
7. Spend Responsibly as a College Student
To improve your credit, you will have to spend responsibly. Using your credit card frequently will not move your credit score up. Spend healthy and to do this, you must use your credit card like a debit card.
Make purchases that you know you can pay off. Also, when you keep your credit utilization low and you pay off your credit purchase regularly, it will keep your credit card account active and put your credit score in a nice place.
How to Keep your Credit High as a College Student
Improving your credit is very good, but you also must ensure your credit stays high. To make your credit stay high, here are some steps to take.
- Avoid going overboard. Having too many credit cards can affect your finances negatively, even if you qualify for them. So, you need to avoid going overboard.
- Do not skip a payment and ensure you make early payments, because this can damage your credit record.
- If you do not want to use a particular credit card anymore, do not abruptly close the account, you will still have to keep the account open. This will help increase your credit utilization ratio.
Following these steps will help you keep your credit high.