As a college student, your credit is probably one of the last things on your mind. It can be a challenge to balance your classes and coursework while responsibly managing your finances, especially if this is the first time you have had to manage and budget your money.
Many students don’t realize that they start to build their credit right away. Student loans and expenses like utilities and rent appear on your credit report, so it’s important to prioritize them and ensure you pay them on time.
Here are some additional tips for building and monitoring your credit while you’re a student.
Build Your Credit
As a young person, you may not have a very extensive credit history. Unless a parent listed you as an authorized user on a credit card, your history is probably minimal. Sparse information may make it more difficult for you to secure new lines of credit or loans without a cosigner because lenders can’t be certain of your likeliness to make timely payments.
If you have student loans, these accounts will appear on your credit report and will reflect positively on your credit as long as you make payments on time and in full. If you’re struggling with payments, look into income-based repayment options to avoid going into default.
You may also want to consider opening a credit card if you don’t already have one. Different types of accounts add diversity to your credit portfolio and will reflect positively on your score. Shop around for a card with little to no annual fees. Older accounts are more beneficial to your history, so the account will continue to positively affect your credit over time as long as you make payments in full and on time.
Keep Your Credit Utilization Low
Your credit utilization also plays an important role in your overall credit health. If you regularly use more than 30% of your available credit, this may have a negative impact on your score. For example, if you have a credit card with a $1000 credit limit, you should avoid spending more than $300. This shows that you’re only using a small amount of the credit that’s being loaned to you.
Check Your Credit Report Regularly
It’s important to regularly monitor your credit, even as a student, because there could be errors that negatively affect your report. You can get a free credit report every year from each of the three credit bureaus - Experian, TransUnion, and Equifax. Each report will contain similar but not identical data. Write for a copy of your report and have it mailed to you. If you wish, you can request your report from one bureau at a time, this way you can check the information on your report during the year every four months.
If you find an error on your credit report, be sure to send a written dispute to the credit bureau. You should also dispute it with the creditor. Include any relevant information that supports your claim.
Maintain Healthy Credit
If you continue to regularly monitor your credit report, pay bills on time, and keep your credit utilization low, your overall credit will remain in great standing. Good credit after college will make it easier for you to purchase a car, rent without a cosigner, and may even help you secure a job.