So building credit probably isn’t your biggest priority in college. And who are we kidding… studying isn’t either—but you gotta do it.
Think about future you for a second.
Is future you living in your own apartment or house? Driving your own car? Taking out a loan to make your side hustle your main hustle?
Future you sounds lit. 🍸
Now what do all of those things have in common? They all require good credit, and to get good credit, you gotta build it.
We promise it's not as hard as you think. It’s definitely easier than your intro to stats class.
And since you’d be starting early, you would have a longer credit history for your future, something credit bureaus take into account when generating your credit score.
So start building credit now instead of waiting until after graduation.
You’ll have a 4 year jump on everybody else and future you will be thanking you big time.
So, what is credit?
Credit is the ability to borrow money (with the expectation you’ll pay it back) and actually pay it back.
Over time, you use credit and you build a credit history, like a search history, but for your ability to make payments on time (if you make your payments on time!)
They use your history to create a credit report, and then they score it like a test 🥴
It’s called your credit score
It’s a rating between 300 and 850 and it determines how good you are with money.
Banks, money lenders, landlords, etc. use your score to see if you’ll be able to make your payments on time… or make them at all.
Think of it kind of like an SAT score—biased, doesn’t account for individual circumstances, and has the potential to determine your future—except no one talks about it.
Here are some simple ways you can build credit as a student:
1. Become an authorized user on someone else’s credit card 😈
Family members are a great option.
This means you could use a credit card that’s linked to their account, or you could just be associated with the account and never use the card.
The payment history would show up on both you and the account holder's credit report. So it’s really important to ask someone you trust, because as great as it can be for building credit, it can bring it down too…for both of you.
“Technically,” you aren’t responsible for the charges on the card, the account holder—AKA mom and dad—is responsible. But they’re definitely going ask you for the $10 you spent on White Claws last weekend.
Check out Money Crashers article on What to Know About Being an Authorized User on Someone's Credit Card for more helpful tips.
2. Report your rent payments
Rent is a big expense as a student, and it doesn’t normally get reported to the big bad 3 credit bureau—which can be a good or bad thing depending on who you ask.
If you are on top of your rent, ask your landlord if they report the payments to the credit bureaus through a rent reporting service. (They may already do this. But they probably don’t.)
If they don’t, ask them if they would be open to reporting your payments. (Just make sure the service reports to all 3 credit bureaus.)
For some reason, the credit bureaus don’t talk to each other.
Kind of like you and your ex 🔎
3. Get a credit card
If you qualify for a regular card…
Just make sure you find one with a low-interest rate, no annual fees, and a reasonable credit limit. (We’re trying to build credit not lose it.)
If you don’t qualify for a regular card, a secured credit card could be a great option to help you build credit. They also help you work on your good credit energy. ✨ (Something we’re not all born with.)
A secured credit card works by using a security deposit, which becomes your credit limit.
So if your deposit is $100, you now have a $100 limit to pay your phone bill or your 2 am McDonald’s order. We don’t judge…
Unless you want us to of course 💅
Over time, your payment history would get reported to the credit bureaus, which could help raise your credit score.
4. Don’t apply for multiple credit cards at once
As tempting as it is to sign up for all the credit cards and get those sign-up bonuses, don’t.
Each time you sign up for a new card, the credit card company will pull your credit score, and that will affect it. Pulling 1 credit score is only a 5-10 points deduction, but pulling more than that and you're losing some serious points.
5. Practice good credit energy
Instead of using your credit card to make obnoxious purchases you won’t be able to pay off, use it for the small things.
Use it for those 4 am coffee you buy near the library during exams. Or for the phone bill that you're already paying for.
Don’t buy a PS5 or an Airwrap. 👀
If you keep your credit balance lower than your limit, the credit bureaus will see how good you are with credit, and boost your score because of it.
A good rule to swear by is if you can’t buy it on your debit, DON’T BUY IT WITH CREDIT.
Using your card on the small stuff will make your monthly payments manageable. So you can actually pay your card off every month and get the credit score to show for it. 📈
6. Review your credit reports
Every year, you can pull your credit report from the credit bureaus.
It’s free. It won’t affect your credit score. And it's an opportunity for you to review the report and make sure there are no mistakes.
If there is something you don’t think feels right, you can dispute the mistake with the, and try to get it taken off your report.
7. Trust the process
This sh*t takes time. It won’t be overnight… or next month.
But hopefully after 6 months, a year, 2 years, you’ll see some positive results. That’s why it’s so important for you to get started now, while your loan needs are low. 🙏
Plus who knows what your credit needs will be after graduation.
For a limited time, students can get 33% off their Cleo Builder subscription
Yep. Talking $9.99 a month. It's never to early to start building your credit history. Cleo Builder's here to help with that. Learn more about our student offer here.
(Just a quick heads up though, it's valid only if you haven't used Cleo Builder in the past.)
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Big love. Cleo