With classes, internships, extracurriculars, and attempts to maintain a social life, navigating college almost always feels like trying to get through a never-ending to-do list. In the midst of all the business, though, students often forget to work on something that will affect their finances in the long run - building their credit.
The dorm life may make it seem like it’ll be decades until you need to think about big purchases that depend on good credit, but in reality, a good credit score can come in handy soon after graduation. Not sure how to build your credit? Get an early start by following these 4 tips:
1. Get a credit card.
If you’re under 21, you’ll need to show proof of income or have someone who has good credit (usually a parent or relative) list you as an authorized user. As an authorized user, you would receive a credit card with your name printed on it, but the primary account holder would assume responsibility for the bills. Some credit card issuers may also allow someone to cosign for you.
2. Make your payments on time.
After you turn 21, you’ll have a wider range of credit cards you’ll be able to apply for. Make sure to use your credit cards responsibly and pay all of your bills on time, as late payments will hurt your score.
3. Keep your balance low.
The amounts-owed portion of your credit score can suffer if you exceed the 30% credit utilization ratio of your card. This can happen even if you pay your bill in full and on time, so avoid this by keeping your balance below 30% of your credit limit each month.
4. Pay your balance in full.
It can be tempting to pay the minimum on your credit card bill, but paying your balance in full in essential if you want to avoid paying interest and accumulating debt.