College students have a lot on their plate. Between school work, paying for tuition and working, trying to establish good credit can seem like a relatively minor priority. However, establishing a good credit score in college can have positive effects later in life. The good news is it’s not as hard as it might seem and won’t really take much of an effort. There are a number of ways students can improve their credit scores:
*Establish an account – If a credit card is not already owned, the first step should be to secure one. Look for one with no frills, no annual fee and as low an interest rate as possible. Get as high a balance as possible, but keep it below 25 percent. Make sure to use it responsibly and pay the balance off each month.
*Secured debt – Students can sometimes have difficulty being accepted for a credit card. Another option is a card in which the student is required to put money into an account. Then, charges can only be made if they are covered. This eliminates the possibility of overcharging and using the card will still eventually increase the student’s credit score.
*Piggyback – It can be helpful for a student to have their name added to a parent’s credit account. Each time the parent makes a payment, it will reflect in a positive manner on the student. This will improve the student’s score.
*Old accounts – Avoid the temptation to close older accounts when new ones are opened. Even when they are not used, the length of time those accounts remain open will contribute to a student’s credit history. Closing them can have a negative impact on credit scores.
*Pay all bills – While it’s important to pay the credit card bills on time, it is equally important to pay all other bills on time. Companies that figure credit scores can lower that amount by as much as 20 points each time a late payment is made. On the other hand, consistently paying bills on time can increase credit ratings.
*Increase credit limits – Ask the credit issuer if it is possible to increase the amount of credit available on the account. When the amount is increased, however, that doesn’t mean start charging more. Keep the amount owed relatively low and it will improve the credit report.
Establishing good credit can seem low on the priority list for students, but doing so can reap benefits now as well as in the future. Improving a credit report will make it easier to secure home and car loans at the best rates after graduation. Increasing those credit scores will take some advance planning, but it will be worth it in the long run.
About the Author: This is a guest post from Jennifer Lewis, who writes for a site that has details on financial aid for female students such as academic grants for women. She believes it’s important for students to begin building good credit while at college to help improve their financial situation for the future.