How to Build Credit as a College Student? Simple Steps to Get started!
Here's some Simple Tips to Get Started Building Good Credit During & After College Life!
James has a Degree in Business Administration has joined our Team as a Business & Personal Finance Contributor. His main focus since graduating college has been Office & Business management and he's using his experiences in both Personal Finance and Retail to share with our readers.
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Building your credit without any credit history is tough. You need to start somewhere, but where?
For most college grads, that’s the biggest problem. Many do not know where (or how) they can get the ball rolling on establishing credit.
Without a solid history of credit, making financial advancements in life (such as purchasing a home or a new vehicle) is only going to get harder.
Are you a recent college graduate looking to better your credit and finally get it where it needs to be?
To help you get started, take a look at these 3tips below that all college grads should following order to build credit and create financial responsibility:
1. Keep Your Student Loans in Check
Student loans are one of the biggest killers of credit.
Unless you pay them off completely, these suckers will never go away. If you’re one of the lucky ones who has them, you’re locked in until every red cent is accounted for (and then some).
You should never let your loans go into default. If any financial rough patch should find its way into your life, make sure you use a forbearance or deferment request if there is no way you can make your payment.
One small mistake can literally send your credit on a downwards spiral.
If you can, work on paying a little extra each month. This will help you pay down your principal balance faster, which will save you loads of cash in interest that you would’ve paid otherwise.
2. Use Your Card for Regular Expenses
One of the easiest ways of establishing credit is to actually use it! By using a credit card on a regular basis and paying the balance off completely each month, you make it clear that you can responsibly handle your finances As time goes on, these habits can boost your credit rating, thus opening more doors for you in the future.
If you’re currently paying for food, gas, utilities and other regular monthly expenses with cash, do yourself a favor and switch things up by using a credit card. You’ll build your credit without any extra effort (other than making one lump-sum payment each month).
When you also consider that most credit card companies make payments easy with online access and automated withdrawals directly from your checking account, you truly cannot go wrong!
Quick tip: Sign up for a credit card that offers cash back or another form of rewards that you prefer. By charging your regular monthly expenses and paying the card off each month to avoid any interest, you enjoy the perks of getting free money just for using your card!
3. Make a Budget that Prevents Excessive Card Usage
If there is anything that people hate to talk about, it’s budgeting.
No one likes to feel restricted, but a budget is not only necessity, but crucial.
If you’re flinging your money out the window and charging up unnecessary purchase: without thinking about how it will affect you, you’re going to be in for a world of hurt.
The only way to keep your finances in check and ensure your credit rating continues to grow is to create a budget.
Creating a budget and sticking to it doesn’t mean you have to live like a hermit. Instead, it’s all about telling your money where to go, rather than wondering where it went. Don’t look at your credit card like a free money access card.
That’s not what it’s for.
Again, the key to success is to use it for expenses that you would already be paying for on a regular basis. Using credit without a budget and buying things you don’t need is a recipe for trouble.
If you can avoid it, you’ll be well on your way to a credit score that you can be proud of.
Get Started on Your Credit Today
Remember, building your credit doesn’t have to be difficult. Start out small and ease your way into the process. When you do, you will create solid financial habits that will help you pave a path to financial stability that will last a lifetime!
