Establishing a credit history and building a credit score are super important activities that college students need to start thinking about. Why? Having a credit history and good credit score will affect your ability to be accepted for future car loans, mortgages, etc., and even whether particular employers will choose to hire you or not. Yes, many employers check the credit of their potential employees to help determine if they are responsible individuals.
So how can you get YOUR credit off and running? What if you don’t have any credit at all??? Happily, you have a few options. Read on to get started, then do some research online to learn more.
1) Obtain a secured credit card.
These cards involve a deposit amount of a few hundred dollars to open the account. After about a year of good behavior (pay on time, etc), you can usually successfully apply for an unsecured card. If you have absolutely zero credit and your applications are denied by credit card companies, this is the way to go to get started.
2) Ask your parents to co-sign with you for a card.
Your parents’ credit history will help get your application accepted. As a co-signer, they will be liable if you fall behind on payments. Though this extra liability is a nice safety net, it is not a good way to keep a friendly relationship if you choose to use it. So if you get a co-signer, the best thank-you to them is to pay your bills on time! But you already planned on doing that anyway, right?
3) Ask your parents if you can be an authorized user on one of their cards.
Your parents pay the bill, and your credit score benefits from their timely payments. However, they can cancel your authorized user status if you begin to use the card irresponsibly. So again, be on your best behavior if you are able to utilize this option.
There are many other options out there for building a credit history and score from the ground up, but hopefully these ideas will get you started.