Your credit in college can impact your future. Find out how!

As a college or university student, you start building your credit history as soon as you make your first purchase on credit.  The way that you pay back any loans you took out to fund your college or university degree is also a part of your credit history.

According to USA Today’s September 7, 2009 “How do college students build credit history as rules change” article, the Credit Card Act of 2009 made it unlawful for financial institutions to offer credit cards to people who are younger than 21 years old and who cannot prove that they have the income to pay for their credit card purchases.  However, if you are younger than 21 years old and do not have a job while you attend college or university, there are other steps you can take to build your credit history. 

Ways that you can build credit as a college or university student without using credit cards are to rent an apartment off campus and make your rental payments on time, purchase an auto and keep your auto insurance coverage payments current.  If you rent an apartment, you can also build good credit by paying your utility, cable and Internet bills on time.  Furthermore, you can take out a membership at a fitness club and make payments before the due date expires. 

Building Credit Without Using Credit Cards

If you work part-time or full-time, purchase products and services that are within your buying range the first time you buy an item on credit.  For example, instead of purchasing a $30,000 luxury or sports car, establish early lines of credit by buying a commuter car that’s easy on gas and your wallet.  Allow yourself to get accustomed to making regular monthly payments on your early purchases before you go out and buy more items on credit.  Also make sure that you negotiate a low fixed interest rate for each product and/or service you buy.

Understanding Credit History as a College or University Student

Depending on the company you buy your products and/or services through, any late payments that you make can get reported to the three major credit bureaus (i.e. Experian, Equinox, Trans Union) after you become more than 30 days late in paying your bill.  Paying credit card debt down, even if you pay your bills on time, can also help to raise your credit score.  Other financial records that impact your credit history are repossessions, loan defaults and bankruptcies.

Benefits and Rewards of Building Credit History while Attending College or University

Benefits of building a good credit history now while you are in college or university, and perhaps still supported by your parents financially, are:

  • Healthy financial habits that can follow and reward you throughout your lifetime
  • Ability to reserve hotel rooms and airline tickets on credit
  • Records that prove to landlords and mortgage companies that you hold yourself responsible for financial choices that you make
  • Employers can view you as a reliable and trustworthy employee when they review your credit reports as part of their employee background checks

Building and maintaining good credit history can also help you to feel good about yourself, thereby raising your self-esteem.  When you are offered opportunities to purchase larger products, you will have the confidence and the experience to know that you will make a wise purchase decision and make your credit payments on time.

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