How Students Can Build Good Credit

There are many ways a student can establish early credit history and maintain a good standing. On this post, let us take a closer look at some of these steps:

1. Acquire a student credit card. If you are under 21 years old, the new Credit CARD law requires you to have a cosigner to get approved for your own credit card. However, if you can show proof of independent income, you can acquire a student credit card by yourself.

Having a credit card in your name is a great way to establish your personal credit history while in college. Nevertheless, students must remember that being a credit cardholder involves serious obligations to your issuer. The key to building good credit is to be able to manage your account responsibly. So before signing up that student credit card application, ask yourself, “Am I ready to take on the responsibilities of a cardholder?

2. Choose a credit card that fits you. There are many types of credit cards for students to choose from. You can ask your parents or guardian to help you in evaluating your choices. Someone with real experience in managing a real account will be able to give you essential pointers on what to look for from a credit card.

Some youngsters excitedly sign up for a reward credit card without first considering if it’s the right card for them. Take note that credit cards with rewards carry higher interest rate and if you’re not careful in managing your balance, you could end up paying expensive rates and fees instead of getting rewarded. The type of reward program can also make a big difference in enjoying benefits and this is why it’s very important to take the time to evaluate and compare choices.

3. Avoid bad debt before it starts. As the popular saying goes, “An ounce of prevention is better than a pound of cure.” You can avoid problems associated with bad credit if you are careful with your spending.

A student credit card may be convenient to use as payment but if you fail to pay your balance on time, you could easily get into trouble. Before using your credit line, seriously consider if you will be able to pay your full balance on time.

If you are going out with your friends, do not bring your credit card with you to avoid being tempted to spend. Do not use your student credit card for personal purchases that you can pay with cash. Youngsters must exercise self-discipline to fight the temptation of splurging or spending on unplanned purchases.

4. Monitor your account. Make it a habit to review your monthly billing statement before paying charges. Sometimes, errors may occur and you could end up paying for charges you did not owe. All credit cardholders have the right to dispute unauthorized or erroneous charges from their account as stated in the FCRA (Fair Credit Reporting Act) so if you notice unfamiliar charges in your bill, call up your issuer right away.