There’s a lot to worry about when you’re in college. There are classes, friends, internships and parties to worry about. But what many of us probably should have been thinking about a lot more was our credit. In fact, now that we’re older and wiser, there are a lot of things we wish we would have done differently when it comes to our credit.
Unfortunately, there’s no freshman orientation on building credit. So a lot of students fail to grasp the reality of responsibly using a credit card until it’s too late. They might even graduate with a pile of credit card debt on top of their student loan debt. But instead of trying to prevent college students from getting their hands on credit cards, it’s important to teach them about proper use.
Here are five credit tips that every college student should know.
1. Don’t Be Afraid of Credit
Staying away from credit cards completely won’t help build a strong credit profile. Since a large portion of your credit score is determined by your credit history, the earlier you establish lines of credit, the better.
Whether you like it or not, credit is becoming more and more important in aspects of every day life. Things like mortgages and car loans require good credit, so if you ever plan on buying either of those items you’ll need a good score.
2. Get Added as an Authorized User
It’s nearly impossible to get approved for a regular credit card if a college student has no income. But it’s easy to be added to a parent’s credit cards as an authorized user. All it takes is a phone call.
This is one of the best ways to establish credit without having to apply for your own card since there’s no credit inquiry and your credit report will reflect the same credit utilization rate as your parent’s card. (Just be sure your parent has good credit.)
3. Apply for a Student Card
Since it’s difficult to get approved for a regular credit card while you’re in school, consider applying for a student credit card. The limits on these cards are low, but they are a great way to establish credit.
Having a student card will also give you an opportunity to learn how to manage your money, pay monthly bills and spend responsibly.
4. Use Your Card Wisely
It’s important to realize that your credit card bill should be paid off in full every month. If you can’t pay your balance in full, you’ll start to accumulate interest and fees and that’s what the credit card companies thrive on. Treat your credit card like you would your bank account and don’t ever spend more than you can afford to pay back immediately.
5. Understand Your Credit Report
If you want to understand how credit card companies and banks view your credit it’s important that you understand your credit report. You should check your report for accuracy at least once a year in order to ensure that all of the information listed is correct, and dispute it if it is not.
Image: Ingram Publishing