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From Editor: This is a guest article from Stella Walker of credit score guide
With classes in full swing, most college students are now naturally preoccupied studying for tests and making new friends. While those two areas are extremely important aspects to tend to, one area they shouldn’t neglect is their finances—and no, we’re not just talking about budgeting. Throughout their college career students need to diligently work to build their credit. The concept of earning credit might not seem all that important now, but it will play a major role once a student earns his or her diploma—it affects everything from deposit rates for renting an apartment, to acquiring business loans, to even making major purchases like a new vehicle. That said, below are some small venues students can pursue in order to slowly start to build their credit while in college.
1. Open a Checking and Savings Account. Opening a bank account is the utter most basic thing you can do to start building credit. The act of opening an account won’t give you credit exactly, but the way you manage your account (i.e. you always deposit money and you never overdraft or bounce checks) just might. This is because the simple act of being responsible with your money will help you appear “trustworthy” and “stable” in your bank’s eyes. “Trustworthy” people are the ones who are offered credit cards—and credit cards can help you build your credit substantially, which leads us to option 2.
2. Piggy Back on Parent’s Credit. While yes it is true that credit cards hold the most weight in terms of helping you build credit, you may not be eligible to receive one right away. If this is the case, you can ask your parents (or another family member or friend with great credit) to place your name on their credit card. Assure them that you won’t use the credit card; in fact they don’t even need to issue you a tangible copy if they don’t quite trust you. All you want is your name on their card. By doing this, their good credit history is transferred over to you. But if for some reason they start making some bad judgment calls, then naturally their bad credit will transfer to you as well.
3. Pay your Own Cell Phone Bill. Another easy way to build your credit is to have your cell phone plan placed under your own name, not your parents. If you have no credit you will most likely be forced to pay at steep deposit and activation fee, but it will certainly be money well-spent since it will enable you to get a little bit of credit under your belt. Just don’t be late on your cell phone payments, or you can ruin your credit instead.
4. Get a Department Store Credit Card. These types of credit cards—which you can retrieve from just about any major department store such as Macy’s or gas stations such as Shell—don’t have quite the power as a traditional Master and Visa credit cards, but they can in fact help build your credit. Just make sure that you don’t apply for too many. You can find yourself in a heap of debt if you’re not careful.
5. Take out a Student Loan. Lastly taking out a loan, even one as small as $1,000, can help build your credit a great deal. Of course, you will not actually start to build your credit until after graduation, meaning once you start making small monthly payments to pay off the loan. But it’s a sure fire way to build your creditworthiness. If you are looking for an instantaneous boost for some reason or another, you can try to obtain a small personal loan from your bank and work to pay that off in small increments right away to reap some credit-building benefits.
Author Bio: Stella Walker is a freelance writer of credit score guide where she writes about topics including credit, debt, investment, bankruptcy.
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