One of the most exciting things about being a college student is practicing independence. Financial experts do advice that the best time to start building good credit is while you are still a student. Even with the changes to the credit card law, it is still easier for students to apply for their first credit card. If you are a student, what should you to build up good credit history? Below are tips:
1. Choose the right credit card for you. If you are under 21 years old, you can apply for a student credit card with help from a co-signer. Nevertheless, if you can show proof that you have an independent source of income, you can qualify for a student credit card even without someone else co-signing for you.
When choosing a credit card, make sure that you understand the Terms and Conditions of your issuer. Keep in mind that there is not one credit card that will fit everyone’s needs. Therefore, you have to evaluate your personal needs and find a credit card that will complement your lifestyle.
A low interest credit card is best as it can protect you from the risk of debt build-up in case you may need to occasionally carry a balance. Nevertheless, remember that the surest way to build good credit history is to use your card only on important expenses and to pay off your full balance each month.
2. Use your credit card regularly. Just putting your student credit cards in your wallet will not do you much good either. In order to build credit, you need to prove that you can handle debts and repayment. Therefore, use your card on an important purchase but keep your charges minimal.
Before charging anything to you card, consider carefully if you can afford to pay it back on time. If you have doubts, use it only for a small purchase and pay it with your cash, the same day you made the purchase.
3. Always be on time. One of the most important things that students must learn about handling debt and finances is being on time. Keep in mind that frequent late payments can lower your FICO score by as much as 35%.
If you are having trouble remembering your due dates, it may be best for you to arrange automatic payments with your bank. This way, late payments can be prevented. Paying on time not only protects your credit history, it can also save you from additional credit card fees like late penalty and interest rates.
4. Do not apply for too many cards. While you’re still in college, it is not advisable to get more credit cards for students than you can handle. In fact, one credit card should be enough to build good credit history. Even though other Issuers may send you varying credit card offers, you need to be strong enough to ignore them. If you have taken out one or two student loans, how you manage your repayment with these loans will also help you build an excellent credit standing.
About the Author
Samantha Wilson is a consultant for credit cards for students. For years she has written student credit card articles that would help build student credit.