How to Build Credit as a Student in the US?
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How to Build Credit as a Student in the US?


Getting an early start on building credit can help you achieve your financial goals before and after graduation and help you obtain financial products and lower interest rates in the future. Having a decent credit score is essential for many crucial aspects of life. It will be relevant when you apply for credit cards, a mortgage, and a vehicle loan.

A solid credit score, though, can also be important in unanticipated ways. For instance, certain rental properties will use your credit score when deciding whether to rent you an apartment, and some cellular service providers may look into your credit history when assessing if you qualify for financing on a phone.

Let’s learn about how to increase credit score as a student with the best ways for a student to build credit!

What is the Importance of a Good Credit Score in the US?

In the US, your credit score is not just a number; it significantly impacts many aspects of your daily life. Your credit score will follow you wherever you go, regardless of whether you want to buy a car, acquire a job, or even rent an apartment. While having low credit might cost you money in ways you would not anticipate, having a good credit score has several benefits:

  1. Lenders use your credit score to assess your creditworthiness.
  2. Your credit score impacts your eligibility for credit cards, loans, mortgages, and auto loans, as well as the interest rate and terms that lenders may assign you once you are accepted.
  3. When you apply for a new policy, a lease, or an apartment, potential employers, landlords, and insurance companies might all check your credit report.

In these situations, a high credit score works as a sign of your trustworthiness and financial responsibility.

What is the Importance of Building Credit as a Student?

Having good credit as a student means more than just being able to make purchases with a credit card. You'll need to rely on your credit history as a fully independent adult, from getting a telephone and utilities in your name to being eligible for the best car insurance rates. Your credit history will heavily influence your application's acceptance. It will also influence if you must make additional security deposits and how high your interest rates will be.

Obtaining an apartment, a credit card, or a loan might be more challenging and potentially more expensive without a credit history. It takes time to establish a credit history, and delaying can make it harder to live independently. That’s why building credit as a student is crucial to establish a solid credit history as soon as possible.

Additionally, your credit may be checked by landlords before they approve your application for an apartment, and it will be important when you buy your first automobile to commute to work every day. When looking for your first job, potential employers may consider your credit history but not your credit ratings.

What are the Best Ways to Build Credit as a Student?

The earlier you establish credit, the more time you will have to concentrate on raising your credit score. Here are the best ways for a student to build credit:

  • Become an Authorized User
  • Get a Student Credit Card
  • Develop Credit-Savvy Behaviors
  • Opt For a Cosigner
  • Get credit for the Student Loan you've paid

Let's explore these best ways for students to build credit in detail!

  • Become an Authorized User

One excellent option to begin establishing your credit is having a parent or guardian add you as an authorized user on their credit card. You will benefit from having your credit card and access to the primary cardholder's credit limit as an authorized user. You won't be legally obligated to settle the credit card debt. You don't even need to use the card to profit from activity on the account, raising your credit score.

Ensure the credit issuer reports authorized users to credit bureaus if you are considering this option because this is not always true. If authorized users are not reported, your account won't be affected.

  • Get Student Credit Card

This will be another way to establish your credit history if you can apply for a credit card in your own name. Secured credit cards may be enticing if you're trying to establish credit for the first time. You must pay a security deposit to obtain one, which serves as your initial credit line. For instance, after making a deposit of $200 with the Zolve Azpire Credit Builder Card, you'll receive a credit line of $200. Since you typically spend more than the initial deposit for these cards, they can teach you how to manage your credit appropriately. Be sure the issuer submits your activity to the credit bureaus so you can begin.

  • Develop Credit-Savvy Behaviors

The best way for students to build credit is to be cautious while managing your credit after you open your first line of credit, whether it be a credit card or a student loan. Making wise financial decisions can be aided by understanding how credit ratings function and why credit is significant. Here are a few essential pointers to bear in mind:

  • Your balance must be paid in full and on schedule. By making on-time, full payments, you demonstrate to creditors your dependability and commitment to repaying your debts. It's frequently a crucial element in figuring out your credit scores.43
  • Do not open several accounts at once.
  • Another aspect of your credit may be impacted by your "new credit."

Note: Limiting the number of credit card applications you submit will ensure that you never extend your credit limit, and refraining from excessive spending is the best course of action when trying to raise your credit score.

  • Opt For a Cosigner

Another best way for students to build credit is to have someone cosign for you on a credit card, just like with loans. However, your selection of credit cards will be limited. You are the main cardholder when you open an account with a cosigner. You must handle all charges made on the credit card, and bills will be mailed to you in your name. But if you don't make your payments, your cosigner will be responsible for clearing the account's debt. It could be challenging to obtain a cosigner because doing so has some dangers for the person doing it.

  • Get credit for the Student Loan you've paid

Even if timely rent payments don't always show up on credit reports, you might be able to change that. You may improve your credit even without obtaining a credit card or loan, thanks to a number of businesses that will help ensure your good rent payment history is reported. For instance, eRentPayment reports to the Experian and Equifax credit bureaus. You must register your landlord to utilize the service, which has a nominal monthly fee of $10 and a transaction fee of $3 from eRentPayment. Trying to get your lease recorded on your credit can be worthwhile if you've always paid your rent on time and the lease is in your name. This is one of the best ways to build credit history for students.

The sooner you begin building credit as a student, the longer your credit history will be, which could lead to better credit. Repaying your school debts or adding yourself as an authorized user on a family member's credit card are two ways you might start establishing credit. One of the best ways to build credit as a student is to apply for secured credit cards like Zolve Azpire Credit Builder Card. It acts as a good starting point to assist students looking to build their credit history. Just be careful to adopt wise credit practices, such as charging just what you can afford and making prompt and complete payments of your monthly balance.

Frequently Asked Questions (FAQs)

Q. How does a student build credit?

A. Here is how to build credit as a student:

  • Sign up for the right type of credit card
  • Become an authorized user
  • Set up automatic credit card payments
  • Make your rent and utility payments count
  • Timely repayment of student loans

Q. How to improve your credit score as a student?

A. Some straightforward methods on how to improve credit score as a student are listed below:

  • Paying off monthly debt and loans on schedule and in full before the deadline.
  • Avoiding credit extensions and using unsolicited new card offers.
  • Self-precaution goes a long way, so disregarding past-due invoices is strictly prohibited.
  • Keep the lines of communication open with the creditor and make plans for payback when you are having trouble paying your bills.

Q. What credit score should college students aim for?

A. A college student should aim for a credit score of 670 or above. Credit scores are created by credit rating agencies. Your credit history and how you now use your available credit are used to determine your score. Credit scores fall into the following categories, ranging in size from 300 to 850:

  • Poor (300-579)
  • Fair (580-669)
  • Good (670-739)
  • Very Good (740-799)
  • Excellent (800-850)

Q. Do student credit cards increase credit?

A. A student credit card is one way to do this, as it gives you a chance to do so while you're still in school. There is no security deposit necessary, unlike unsecured credit cards. Earning cash back, airline miles, and other benefits are also possible. Make it a practice to pay off your debt in full each month to prevent incurring interest fees.

Q. When should one begin establishing credit?

A. The best way to build credit as a student is to start by getting a credit card when you turn 18 so you can start building credit and learning responsible financial practices early on. The minimum age to get a credit card is 18. Hence, the sooner you start, the better it is.