Credit Scores

Need A Credit History? Start Building One In College


As a college student, you probably worried more about acing your finals and writing your research papers than about building a solid credit history. And if you’re a parent of a college student, teaching your child how to build a solid credit score probably doesn't top your list of priorities.

Here’s the truth: College students will need good credit sooner than they think. And working to establish that solid credit while attending college will pay off in the future.

Mortgage lenders rely on your three-digit FICO credit score when determining whether you qualify for a mortgage loan and at what interest rate. College students who dream of owning a home one day will need a solid credit score.

They’ll also need good credit if they want to take out a loan to buy a car or if they want to qualify for the best credit cards.

So while the world of credit scores and credit reports might seem unimportant to college students or their parents, building a credit score while still a young adult is a laudable goal.

Too many college students graduate with no credit history at all because they've never used credit cards or paid the kind of bills (auto loans, student loans, mortgage payments) that are reported to the national credit bureaus.

Fortunately, you can build a credit history while in college. First, apply for a credit card with a low credit limit. Then use that card to make purchases each month, but only buy what you can afford to pay off in full when your credit card bill comes due. Finally, make that credit card payment on time each month, paying off your balance completely.

Credit card payments are reported to the credit bureaus. And if you pay your card on time each month, you’ll steadily build up the solid credit score you’ll need once you’re out of college and starting your career.

Just be careful: Don’t pay your credit cards late—30 days past the original due date makes a payment officially late and that practice will damage your credit score. Don’t run up debt that you can’t pay off each month as interest will cause that debt to swell. Having lots of credit card debt will also hurt your credit score.

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