5 Steps for Students to Build Good Credit Score


Building good credit is crucial. And that is because your credit history largely determines your financial future. To qualify for loans, rental applications, auto insurance, or even employment, your credit history has to be good. And you need to lay the foundation for this while you’re still in college. But what are the means to build good credit score for students?

5 Simple Steps to an Excellent Credit Score

Step 1- Consider Federal Student Loans

With little or no credit history, you may find yourself facing a frustrating credit dilemma. You may not qualify for loans or credit cards from the best private lenders because you don’t have an established credit history. And you cannot build a history without loans or credit cards. One way to overcome this is to opt for Federal Student Loans. Since these loans do not require a credit check, you can get a loan, and build a positive credit history by repaying the loan on time.

Step 2- Piggyback on Your Parent’s Card

You can become an authorized user of a family member’s credit card and make use of it. While the responsibility for the card still remains with the primary holder, this is a great way for you to establish and build credit at an early age. When you manage the credit card well the primary holder’s credit score also gets a boost besides yours.

Step 3- Get a Student Credit Card

The last thing you want is to graduate with credit card debt. But, using a credit card is one of the quickest ways to build good credit score for students. A revolving line of credit gives you the means to rise your credit score. You can do this by choosing the right student credit card that meets your needs. This gives you an opportunity to prove to the issuer that you can handle finances well. And by keeping your credit card balance low and making payments promptly, you can improve your credit score dramatically.

Step 4- Manage Credit Wisely

Prudent credit practices come a long way in building good credit score for students. So once you open your first line of credit, manage it wisely and make smart financial decisions. Keep two things in mind- pay off balances on time to prove your responsible credit behavior to issuers, and avoid opening multiple accounts if you do not wish to be seen as a ‘risky borrower’ with many accounts and short histories.

Step 5- Get Your Rent Payments Recorded

Your rental payments can bring a positive effect on your credit score. Paying rent on time is not always reflected in your credit. But you can change this by having your rental payments reflected in your credit history. TransUnion, Equifax, and Experion are a few credit reporting bureaus that provide a way for you to include rental payments in your credit reports.

680 or above is considered a good credit score for students. This is the score needed to get student loans and credit cards from leading lenders. However, the average credit score for someone between 18 and 24 years of age is 630. This means that there is a pressing need to start thinking about your credit score as early as possible. Remember- the sooner you start building, longer is your credit history and healthier your credit.