College students usually have more on their minds than their credit scores. While you’re still in college or if you’ve just graduated, loans, like mortgages or car loans, may not be an immediate need: it may be years before you need to buy a home or a car.
Too often, most college students or recent graduates don’t realize is that it is never too early to start thinking about building a great credit record. If you’re a recent graduate, your credit history starts now.
Follow these 6 tips from Peerform to start building a great credit score today:
1- Become an authorized user on your parents’ credit card account. Assuming your parents have a good credit score, being an authorized user on their account will boost your own credit score.
2- Get a credit card. This is one of the simplest ways to build a credit history but it is also one of the easiest ways to get into credit trouble, so you want to keep these three things in mind:
- Be aware of the terms and costs when applying for a credit card
- Do not apply for several credit cards at once
- If you don’t have any credit history, ask your bank about a secured credit card. With a secured credit card, you make a deposit into your account, and that amount determines your credit limit.
3- Use retailer programs to make large purchases like furniture, and be sure that the retailer will report your loan to the major credit reporting companies. These programs are an easy way to start building your credit score.
4- Get a cell phone in your own name and pay your bill on time. This is another easy way to build good credit history.
5- Pay everything on time. Any late payment will negatively affect your credit score.
6- Pay off any credit card balance each month, and make sure to stay within your credit limit to avoid penalties. This will help keep your credit utilization ratio as low as possible. Your credit utilization is the ratio of your debt (credit card balances) to your total available credit limit. For example, if you have a credit card with a $10,000 limit and a balance of $5,000, your credit utilization is 50%. The lower your credit utilization ratio, the better your credit score.
Make use of these tips, handle your finances wisely, and you will be building a great credit score that will lay a foundation for a solid financial future.