Five tips to build your credit as a college student



Lorna Saboe-Wounded Head

KELLICIA CARR, SDSU Extension volunteer

There are many advantages to having good credit. Businesses might review your credit report to determine approval for a car loan, home loan, personal loan, renting an apartment or even getting a job. Additionally, if a business chooses to give you a loan, your credit score may help determine the loan terms. Usually, the higher your credit score is, the better your loan terms may be.

Here are five tips to build your credit.

  1. Find out what is on your credit report. To start developing a plan to build your credit, it may be beneficial to understand what is on your credit report. You can visit each year to obtain a free copy of your credit report from the three nationwide credit reporting companies Equifax, Experian and TransUnion.
  2. Dispute Credit Errors. It is important to correct any errors on your credit report, which may adversely affect your credit score. If you notice an error in your payment history like a bill incorrectly marked as late, it is advised to resolve the discrepancy on time to benefit from a potential improvement in your credit score.
  3. Pay your bills on time. To ensure you are reaching your goals of making on-time payments, set reminders before the due date, or if you are short on money (life happens), communicate with your creditor to arrange payments. Remember that late or missed payments can remain on your credit report for up to seven years. 
  4. Open a secured or unsecured credit card. Learn about secure and unsecured credit cards and choose the best options for your financial situation. If you don’t have any credit, using a credit card responsibly to build credit could be an option because that activity will be reported to the credit bureaus. Keep your credit limit in mind and make sure your balance is well below that limit. 
  5. Make payments towards student loans. If you have a job and can afford to pay down your loan, it may be beneficial to start repaying your student loans while you are still in college. Even though you may still need to take out more loans, paying down your student loans early will reduce the amount you will have to repay when you graduate which can create more opportunities to get financing for something else. Starting to repay your loans early could also be great practice to get you in a routine of paying down your debts consistently which is a great credit-building practice.

If you are a student who has not started building your credit, you may want to consider beginning the process.