by Maurie Backman | Updated July 21, 2021 - First published on March 9, 2020
Many or all of the products here are from our partners. We may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.
It's possible to build credit during your studies. Here's how.
When we think of college students, it's easy to picture young adults dressed in sweatpants who stay up late cramming for exams while feasting on instant noodles and leftover dining hall scraps because that's all their budgets allow. In fact, a large number of college students are perpetually cash-strapped due to the fact that they're not only without an income, but spending money they don't have to cover their tuition costs.
Therefore, it’s easy to assume that college students are destined to have poor credit -- especially those who don't hold down a job during their studies. But actually, it is possible to build credit as a college student, and there are several good reasons to do so.
First of all, the higher your credit score when you graduate, the easier it'll be to rent a home, qualify for an auto loan, or get approved for a new credit card. And these things are important when you're trying to establish yourself as a functional adult. Secondly, depending on the professional field you're hoping to break into, having good credit could help you land a job. So it pays to make an effort to build credit while you're a student. Here are a few ways to go about it.
Tips and tricks from the experts delivered straight to your inbox that could help you save thousands of dollars. Sign up now for free access to our Personal Finance Boot Camp.
By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.
It may be the case that your parents are covering your living expenses while you're in school so that you can focus on academics. But instead of having your parents pay every bill, take over one or two yourself. For example, put your cell phone bill in your name and use the money you have in your savings account to pay it. Or ask your parents for the money to pay the bill yourself -- it really doesn't matter where the funds come from as long as those bill payments are recorded under your name and made in a timely manner.
It's not always possible to qualify for your own credit card as a student, but if you are approved, paying your bills in full every month is a great way to establish a healthy credit score. One big factor that goes into calculating your score is credit utilization, or the percentage of available credit you use at once. A utilization rate of 30% or lower will help your score, so if you have a credit card with a $1,000 limit, but you pay it in full every month, your utilization will be an excellent 0%.
If you can't get approved for your own credit card during college, another good bet is to have someone -- say, a parent or older sibling -- add you as an authorized user on their existing account. How will that help you? Usually, when the primary cardholder makes payments on time, that good behavior is added not only to their credit record, but to yours as well. That means you can effectively sit back and piggyback on someone else's good credit habits. But be careful about whose account you get added to -- an older sibling who tends to be financially irresponsible is not a good bet. If they're late with those credit card payments, that behavior could have a negative impact on your score.
The better your credit is when you graduate college, the easier it'll be to navigate life in the real world. Take these steps, and with any luck, you'll graduate not just with honors, but with a credit score you can be proud of.
If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR into 2023! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read The Ascent's full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.