How to Build Credit in College

Building your credit might not sound like the most exciting topic right now. You might be more concerned about that Bio exam you have tomorrow or who’s dorm room you’re going to play video games in tonight, but hear us out! Some day in the not-so-distant future you’re going to want to buy a car or rent an apartment and having a good credit history is going to come in handy. Lenders like banks and credit unions use credit reports to assess how risky it is to give you a loan, landlords can use credit reports to help determine if they think you’ll be reliable to pay rent and many employers check job candidates’ credit reports during the hiring process.

Here are some key dos and don’ts to build your credit.

Do's

• Become an authorized user: If your parent or guardian is open to it, you can become an authorized user on one of their credit cards. This means you will get a card to use, but they will remain legally responsible to pay off the debt. When payments are made on time and the balance remains low, this will help you establish good credit.
• Open a student credit card: Many financial institutions including Landmark offer a student credit card to help you start building your credit. Our Student Rewards Visa® allows you to earn points that you can redeem for rewards like gift cards, merchandise and travel. Plus, we’ll give you extra points for each semester that you earn good grades! Just be sure to use your card responsibly. Use it for small, intentional purchases that will be easy to pay back.
• Make payments on time: Payment history is the most significant factor on your credit report. Not only will you want to make on-time payments to ensure your credit score doesn’t get dinged, but you also don’t want to get behind and start owing interest.
• Get a cosigner: If you need a loan before you’ve established enough credit history to qualify for one, you can ask someone with a good credit history to be a cosigner. This can help you land a loan, but keep in mind that they will be held responsible for any payments you don’t make.

Don’t

• Treat credit cards as free money: When you have a credit card in your wallet, it can be tempting to use it for things you want but can’t afford like a new pair of shoes or concert tickets. The reality is using your credit card means you’re borrowing money. You want to ensure you can easily pay it back.
• Use too much credit: Use less than 30% of your available credit limit. For example, if your credit card has a $1,000 limit, keep your spending under $300. Going over that amount may harm your credit score. Plus, the more debt you accrue, the harder it will be to pay it back.
• Apply for too many cards: Adding multiple credit cards at once can be a red flag to lenders that you are a risky borrower.
• Close accounts too soon: If you open a credit card and don’t use it, you might want to keep it open as long as it doesn’t have an annual fee. Keeping the card open will extend the average age of your accounts which has a positive impact on your credit score.

Taking small steps now to show that you can handle credit responsibly will help you build your credit over time. This will give you greater opportunities for loans with better rates in the future.