💪Starting strong: 4 tips to build credit as a college student
Life comes at you fast! And for your child, building their credit history early can have a massive impact on improving their financial wellbeing. After all, not long after graduating, they’ll be looking at renting apartments and taking out loans. All places where a bumped-up credit score can make a huge difference. Here’s 4 tips to help your child build a solid credit history in college:
1. Start with a student credit card
Student credit cards are specifically designed for young adults and people new to credit. These cards typically have lower credit limits and fewer rewards, but they can help your child build their credit history if used responsibly. Responsibly is the key term here. While building a credit history can help them boost their score, missed payments or carrying a balance can have an even greater negative impact.
Look for a card with:
- No annual fee (or a low fee)
- Low interest rates
- Student-friendly perks, like cash back or discounts
2. Pay bills on time
The payment history is one of the most important factors in building a credit score. It’ll be important for your child to pay their credit card bill on time to build a responsible payback history. Ensure your child sets reminders and automatic payments to ensure they never miss a due date.
3. Monitor credit regularly
Many credit card issuers offer free access to a credit score through their online portals or apps. Have your child monitor their credit regularly to keep track of their score, ensure there are no errors, and check for any suspicious activity.
Some credit cards also offer credit score tracking tools that can help them stay informed about their credit health. Annually, they can also obtain a free copy of their credit report at annualcreditreport.com.
4. Be Patient—Credit Takes Time
Building a solid credit history takes time. Even if they start building credit as freshman, it will take years to establish a strong credit score. But celebrate the wins along the way. Consistency in making payments on time and maintaining low credit utilization is key to building credit. This is why it’s so critical to start early.
In summary, building credit as a college student can be a great first step toward your child becoming more financially independent, but it requires responsibility and discipline. Have them start with a student credit card, keep their balances low, and pay on time. Over time, they’ll build a strong credit history that will open doors for them financially in the future.
All the best,
Andrew Holmes, Certified College Planning Specialistâ„¢
Andrew@PlanWithFPS.com
617-630-4978
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.