There are always those defining factors in life that let us know we’ve hit adulthood. For most, financial independence is one of those things you learn in your early years of college. Though the thought of being financially independent is exciting, the journey there can be difficult.
Building a good credit score is a great basis to ensure your future financial security. If you want to qualify for loans, auto insurance, rentals, phone plans and so much more, your credit score often serves as a determining factor. So, how do you start building good credit? The trick is to be responsible when handling money. Check out these tips for building a strong credit score early on.
Open a Credit Line
If you’re a student with a steady stream of income, consider applying for a card. The responsibility of handling a credit card is yours alone. Make sure to find one that matches your needs and that you’re willing to maintain. When picking a credit card company, look at the interest rates, annual fees, credit limits and billing policies. Weigh the benefits of various cards and decide which better suits you.
Pay Balances Early or on Time
If you’re starting to build a credit score, it’s best not to carry any large balances on your cards. Make small purchases that you can afford to pay off at the end of each month, like gas and groceries. There’s really no reason for you to be paying interest fees early on.
Don’t neglect your other bills. Credit bureaus now look at other forms of payments, like utility bills, to determine credit scores. For young people without a credit card, this could serve as a start for building a credit score. Make sure your payments are made on time every month.
Avoid Overusing Credit Cards
Most consumers are better off with as few credit cards as possible. For college students, just one is enough. Your credit score will suffer if you apply for too many credit lines in a short period of time. Those with good and long-standing credit scores may not experience as much of an impact, but a student just starting to build credit will definitely feel it.
Be Smart About Student Loans
Too many students take out school loans to pay for items that are not school related. You should borrow only what you need. School loans can help you develop good personal finance habits. Focus on paying your loan debt on time to be on good standing with the creditor. If you can pay more than the minimum payment, it’ll look better on your credit report and you’ll pay the loan off faster.
Avoid Co-Signing Trouble
If your underage college friends are looking for a co-signer to start building their own credit score, consider the consequences of helping them. If you’ve established a good standing in the credit score ranks, don’t tarnish it by co-signing as a joint account holder. As a co-signer, you are held liable for accumulated debt or missing payments. Your friend’s mistakes could ultimately cause your credit score to fall.
Speak with a Financial Advisor
If you’re ready to start building your credit score throughout your college career, contact our main branch in Brownsville. Credit unions can offer lower interest rates and more lenient policies when it comes to credit cards. Call us at 956.546.3108 to speak with one of our financial advisors.