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Good credit, like experience, is one of those things that you have to build, and it comes with age. Not your calendar age, per se, but the age of your credit history. As college students navigate their way into adulthood, an important thing for them to establish and maintain is good credit. Credit, good—or bad— affects all of our lives in many ways.
Having bad credit can keep you from getting a job, cause difficulty when you try to lease an apartment, result in higher interest rates on car loans, or keep you from being able to enter into a cell phone contract. On the other hand, having good credit makes it easier and more advantageous for you to be able buy a home or car, get a job, borrow money, and obtain a credit card. Therefore, having good credit is a good way to boost your chances for a new job opportunity or keep your car payments low.
If you have a job and are ready to begin building good credit, here is a shortlist of ways you can get started:
First, be sure that you are old enough. If you’re under 21 and are constantly being denied when you apply for a credit card, it may be that you are simply too young. As an effort to protect underage consumers, according to the Federal Reserve, applicants under the age of 21 need to show proof that they are able to make payments, or will need a cosigner in order to open a credit card account.
Open a department store credit card, perhaps. Department store credit cards are one of the easiest ways to start showing that you can be responsible with credit. Keeping your account in good standing by paying off any charges by the creditor’s deadline will show that you can not only obtain credit, but also maintain it.
Pay on time. If you are able to get a credit card, no matter the maximum amount of credit you are approved for, be sure the amount you charge to your card can be paid by the payment deadline. Otherwise, you run the risk of getting behind on payments and heading into debt.
Check your credit report. Your treatment of balances, such as those on department store credit cards, is reported to the three major credit reporting bureaus (Equifax,Experian, and TransUnion). Your student loan and car payments are reported monthly. It’s a good idea, even as you are just establishing your credit, to start tracking your credit history. You can get a free copy of your credit report every 12 months at www.annualcreditreport.com. It will show your credit history, and you’ll also have the opportunity to identify any errors that might need correction.
If you are a college student who is currently working on establishing good credit, let us know what steps you are taking to do so!