Students Build Good Credit

Students Need Good Credit And This Is How You Build It

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With the school year starting up soon, everyone is saying their goodbyes to summer and starting their paths to adulthood. Knowing how students build good credit is important to transitioning into adulthood. The simplest way that I know to start building credit is to get a use a credit card responsibly. Here are a few ways you can establish and build your credit score. (or even rebuild your credit.

What To Look For When Building Credit

There are a few factors to keep in mind as you begin to build credit. Six factors actually. These six factors make up your scoring of your credit rating. I’ve also taking the time to organization in order of their level of impact for you. What more can I say but you’re welcome!

High Impact

  • Credit card utilizationHow much of the credit you use that is available to you displays your credit card utilization. Try to keep this amount under 30% usage. For instance, if you have a credit card with a $500 limit, don’t use more than $150 at a given time.
  • Payment historyPaying your bills on time is extremely important. A late payment on your loans or credit cards can make a huge dent in your credit score and the later the payment, the worse your score is going to result in the outcome.
  • Derogatory marksThings such as bankruptcy and collections are never a good luck on your credit score. Avoid them at all cost.

 

Medium Impact

  • Age of credit historyShowing long you have been building and showing responsibility with credit, try to keep your credit cards active to show that you have been handling credit for a long time. The age of credit is determined by the average age of all your credit. So holding credit for longer periods of time before applying for new credit is recommended.

 

Low Impact

  • Total accountsLenders usually like to see that you’ve used a variety of credit accounts responsibly. This doesn’t mean apply for every card at once. Slow and steady or you will do more harm than good. 
  • Hard inquiries –  These are placed on your report for things such as applying for credit, loans, and even an apartment. Usually when a company has to run your credit for eligibility, you receive a hard inquire on your report. Try to limit these to as little as possible.

 





Ask A Parent To Be An Authorized User

This is actually how I started. My mom is very responsible financially and started me building my credit score by adding me as an authorized user on one of her credit cards. Though I never got the chance to see let alone use the card, her good credit usage and years of account age became my good credit and instantly started me on the right foot. When you become an authorized user on a credit card, its credit history becomes your credit history. Remember that this also could be a risk if your parent or guardian isn’t the most financially responsible person.

Building my credit score this way got me to a score of 740 and I’ve been slowly working on building it along with so nice history of credit types for the last 3 years. This is definitely one of the easiest ways to go.

Get A Co-Signer

Maybe one of the least available options to go. Asking someone to co-sign your credit application may be an sensitive topic because if you make mistakes learning than you won’t be the only one to be punished for it. Most are hesitant to choose this option because it asks a lot of trust from the person asking the co-signer.

I have never had a co-signer but I did want to mention that it is an option for those who may feel it’s right for them. Applying for a card with a co-signer means that the card will be in your name but the co-signer will be responsible if you fail to pay the bill. This could affect their credit score and history as well.

 

Grab A Secured Credit Card

Credit cards that are designed to help people start building credit, secured credit card are cards that require a cash deposit. Not my most favorable choose because of the deposit required by most cards, but this card is a less risky choose. Secured cards are great for people who have been having a hard time getting approved for an unsecured card or looking to rebuild credit history. Because of this, secured credit cards offer the highest approval rates.

 

Practice Good Card Usage Habits

Now, you may hear credit cards are dangerous and should be avoided at all costs! Well, yes and no. Yes, credit cards can be dangerous when used irresponsibly. No, credit cards should not be avoided because they are a great source of credit when used responsibly.

Learning to use a credit card and trusting yourself to have credit is the purpose. Don’t be afraid to make mistakes but here are a few rules to try and limit the mistakes made with your new credit card.

  • Always keep your amount of used credit 30% of your credit limit.
  • Pay on time. Everytime.
  • Use your card for small purchases that you can easily repay ASAP. This will help you build credit safely.
  • Increase your credit score only when you believe it’s time. Don’t apply for a higher limit if you don’t believe you can trust yourself with the boost in credit.


Check Your Score Often

Knowledge is power. So knowing your credit score at all times is important to know what direction it is moving towards as well as what you are doing wrong and right. Remember the six factors from earlier? You should keep these factors under surveillance at all times to ensure that you are growing your credit correctly.

The most important thing to do is manage your credit responsibly and the rest will follow. Building credit doesn’t have to be difficult. Having the knowledge to know what’s important and what to watch out for when it comes to your credit is half the battle. So good luck! Please don’t forget to share this article with your friends (everyone know that one person who needs a little help to be more responsible financially lol). Also comment any tips or experience you may have below to help grow the community’s knowledge. Til next time, have a great school year.

 

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Jonathan Tyler

Entrepreneur | Thinker | Cool Shit Doer at Think Cents
A natural thinker of life, business, and art, Jonathan was born gritty at heart. That grit burns through his blog Think Cents as a desire to fight for financial independence. Seeing how little success traditional work life brings, he's seeking to achieve building his wealth in the more unconventional ways.
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Posted by Jonathan Tyler

A natural thinker of life, business, and art, Jonathan was born gritty at heart. That grit burns through his blog Think Cents as a desire to fight for financial independence. Seeing how little success traditional work life brings, he's seeking to achieve building his wealth in the more unconventional ways.

14 comments

Jonathan Tyler

I hope you guys are ready to start the new school year off right! Let me know below how you plan on building your credit and plans for this school year.

In regards to checking your score often, many credit cards, offer free credit checks (and alerts when anything changes) so that’s very helpful ! Great tips 👌🏽

Jonathan Tyler

That’s true! Most of the time people don’t realize they have this option. Thanks for reading.

The breakdown of low, medium, and high impact was super useful, and I’m not even a student!

Jonathan Tyler

Haha well i’m glad it helped! Thanks for reading 🙂

Yes to practicing good credit habits! Such a good reminder.

Such an informative post!! Love the breakdown. Thanks for sharing!

Jonathan Tyler

Thanks for reading 🙂

I never realized how important my credit score is until I got married. Thankfully my husband is very financially wise. We have done many of the things you have listed here! Always remembering to never spend money we don’t have, even on a credit card. So it can be paid off right away!

Jonathan Tyler

I’ve always been warned by my parents who learned the hard way growing up. So I studied as much as I could before leaving them for college. Thanks!

Tiffany Khyla

I’m so thankful that my parents taught me good credit card usage when I was younger. My credit score isn’t amazing, but it’s really good, and I’m proud that I haven’t abused any of my credit cards. Thanks for sharing this awesome advice! Definitely needed.

Jonathan Tyler

No problem. I was grateful for my parents teaching me as well. Thanks for reading.

Great tips! I got a secured card to build up my credit and it totally worked! Now I have a normal credit card and I love it

-xo, Makaela
http://www.uniquelymickie.com

I actually never gave this much thaight. Really helpful!

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