The following is a guest post about how to build your credit in college. If interested in submitting a guest post, please read my guest post policy and then contact me.
Establishing credit is one of the most important things you will ever do in your life. It aids you in receiving good loans from your bank, and shows others that you are financially responsible and dependable.
Establishing a good line of credit can open the door to many financial opportunities such as purchasing a car for a low interest rate or paying less on a deposit for utilities, and is used by everyone from landlords to cell phone providers to insurance companies.
Doing this at a young age is beneficial because it teaches how to be financially responsible and will help you in establishing a high credit rating. Before getting started however, it is important to understand a few basic concepts.
What makes a good credit score? A credit score simply translates into how responsible you are with credit. Factors such as do you pay your bills early or late, in full or monthly increments are all taken into consideration. Those who are able to establish good credit are generally those who pay their bills early and in full.
What specific factors are taken into consideration when determining credit score? Whether you have good or bad credit, there are generally a few basic factors that go into determining your credit score. First, it is important to pay your bills on time, because paying your bills late will count against your credit. How much debt you have is also taken into consideration, to determine how likely you are to pay your lender back. The amount of time you’ve been establishing credit is also taken into serious consideration; the longer the better.
How do you establish credit? In order to have a good credit score, you need to begin to establish your credit. The simplest way to do this is to open a savings or checking account. Nowadays, banks make it very easy to set up direct deposits, allowing your account to automatically pay specific bills at the beginning of each month. Moreover, you can apply for a credit card if you have a steady income or if your parents are willing to co-sign. However, it is important to only use your credit card for things you can afford to pay off right away, in order to obtain a good credit score.
After you build your credit it is important to continually monitor it. The US Government requires credit bureaus to provide a free credit report to you annually, which will make it easier for you to stay on top of it.
Author Bio: Trae Lewis is a recent graduate of University of Colorado and a staff writer for CollegeFocus, a website dedicated to helping students deal with the challenges of college, including housing, finance, style, health, relationships, and transferring from a community college to a four-year university.