holding a debit card

Being a college student can be stressful enough, with online classes and Zoom meetings, without having to think about financial planning for the future. However, college is a good time to start planning ahead. Building up your credit is a great place to start.

Wondering why you should build credit as a college student? Read on to find out more.


Why You Should Build Credit as a College Student 

Once you graduate and are ready to become financially independent, you will want to have a good credit score built up. Your credit score impacts many areas of your adult life, such as buying a home or car or attending graduate school.

Having a good credit score will show landlords you are responsible and help you qualify for a mortgage on your own. This allows you to not worry about relying on your parents to co-sign the lease.


Benefits of Building Credit in College 


1. Teaches you how to manage your money 

One of the benefits of building credit in college is that it teaches you how to manage your money properly. This is an essential skill to learn as you work toward financial independence. You may be more used to your parents handling certain finances and have limited exposure to managing your personal finances.

By being strategic about how you use your credit card or a student debit card, you can strengthen your money management skills. For example, it is important to space out your purchases each month and not blow all your money in one place. Make sure you are saving money for essentials like gas or your cellphone bill.


2. It's the perfect time 

Another of the benefits of building credit in college is that there is no better time.

While you may not want your parents' help with everything, this is a good place to have them step in. You can take small loans which can add up to your savings as your parents may already be helping pay your college tuition or dorm expenses, you can take advantage of their continued support also.

By having your parents be an authorized users of the card, they can help you build up your credit. They can also help guide you and minimize any future mistakes, such as overspending.


3. You can earn cashback and rewards 

Getting access to rewards is a great perk to building up your credit. If you use your credit card often and choose one with reward bonuses available, then over time, you can acquire these rewards. Some examples of rewards include airline miles and hotel points. While you may not be flying or travelling anytime soon, these points can be used later on for post-graduation celebrations.

Just keep in mind that it may take time to build up these rewards. Another option is looking into student-centred cards that offer a cash-back percentage or perks such as free access to Amazon Prime.


Tips to Build Up Your Credit While in College


1. Get a Student Credit Card 

The first step in building up credit is to have a student credit card. These cards are specifically tailored to the needs and financial situations of college students. This means they may have a lower credit limit and more relaxed requirements than other cards.

Being a college student with student loans, it is important to have a card that is flexible to your needs. It will also help encourage you to spend less on unnecessary purchases and do effective financial planning, so you can increase your credit score.


2. Make payments toward student loans 

Many college students end up graduating with student loans. While you probably want to pay them off just so they are not hanging over your head anymore, it can also help build up credit.

These loans get reported to credit agencies, and payments show up in your credit history. Paying the loans on time and in the amount agreed upon will boost your credit score. This is why it's a good idea to look into paying them while you're still in college.


3. Try to report your rent payments 

While rent payments are often not reported on your credit history, they can help boost your credit. So, you should try signing up for a rent reporting service or see if whoever manages your property is willing to report the information for you.

You may not own property currently, but consider looking into the rent payments you make on your campus apartment.


4. Pat on time and apply best practices

Payment history has a significant impact on your credit score. So, make sure you're paying your bills on time. As a college student, you are often busy with homework and job-seeking but don't use that as an excuse to slack off on paying your bills on time. You may want to consider setting up automatic billing through your checking account to lower the risk of missing a payment.

Another thing to consider is paying off your balance completely at the end of each month. This also shows you have a good payment history. Also, consider only applying for credit when you need it. It may be tempting to open up multiple cards to support your online shopping habits, but misuse can cause your credit score to decline.


5. Keep track of your credit 

Make sure you are continuously keeping an eye on your credit score. Look out for any growth or changes to your score. By being aware of your score, you can correct any errors before it's too late.


College Students Should Build Their Credit Score in College

As a college student, you often have a lot on your mind. The thought of being out on your own and financially independent may seem scary at first. This is exactly why you should build credit as a college student. Some ways to do this are by getting a student credit card, paying your bills on time, and monitoring your credit score.


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