College is an exciting time for students like you all over the world. As you take your first major steps into the adult world, one thing that you’ll need to consider is how to start building financial independence. Building good credit now will be a great benefit to you in the years to come. Your college years are great times to start building credit, but you’ll need to be careful and responsible in order to reap the rewards.
Start By Piggybacking
It will be difficult for many students to obtain their first credit cards without a cosigner. One great way to get a head start on the credit game is to become authorized on a parent’s credit account. This is known as piggybacking, and it allows you to start building good credit by using your parent’s account. This will also allow your parents to monitor your spending and make sure that you’re not being too reckless in your habits.
Open Your Own Credit Card
After some time you’ll want to open your own independent line of credit. Start shopping around for credit card offers that will suit your needs, and always be sure to read the fine print. Your bank may be able to offer competitive rates on a credit card if you’ve been doing business with them for a few years. Look for a credit card that offers a reasonable limit and low interest rates to make sure that you don’t get in too deep with your first card.
Make Small Purchases on Credit
When you have your own line of credit established, avoid making large purchases to start. You might begin to feel like you have more money than you actually have, and this leads to reckless spending and massive debt. Only buy things that you could pay for with cash. Pay with credit when you fill up at the gas station, or treat yourself to an occasional lunch. Making small, regular purchases on credit will help you cultivate responsible spending habits. Keep your debt low and manageable as you start building credit in order to give yourself the best start.
Pay Your Balance Every Month
Most credit cards will require a minimum monthly payment, but whenever you can, pay off your entire balance every month. If you make minimum payments while letting the rest of your debt sit in limbo, you will gradually incur interest on your debt that compounds over time. In your early days of credit building, you want to show your creditor that you are responsible and capable of making your regular payments. Paying your entire balance each month does this without accruing any additional interest.
Keep Up with Loan Payments
Financing an education is never easy, but building good credit will help alleviate your strain in the future. Whether you’re studying at Harvard Law or enrolling in Maryville online courses, keep track of your student loans. You may be able to defer your payments while you study, but make sure that you keep up with payments. Outstanding debts and failure to make payments on time will hurt your credit. Get off to a positive start by maintaining all of your accounts responsibly.
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