If you are still a college student, it is important to start building credit as early as possible. Early credit building will give you the opportunity to achieve your financial goals, including being able to obtain financial products at lower interest rates. Here are some tips to get started: Make all payments on time; limit the number of accounts you have; and avoid spending near the upper limit of each account.
Making on-time payments
As a college student, paying your bills on time can build a solid payment history that can carry over when you leave school. Late payments on credit cards can cause credit damage. It is also important to make your payments on time. Even if that means paying a lower amount than you should, make sure you keep up with your credit card payments.
Building credit while in college is not an instant process, and it will take time. There are still opportunities, even though there are limitations. By making on-time payments and understanding your FICO(r) scores, you can start building your credit history while you're still a student.
Avoid high interest rate
It is crucial that student loans do not have high interest rates. Federal loans are fixed rates, unlike traditional loans that have a variable interest rate. They are slightly higher than they were last year, but they are still lower than what they were in 2014. They are not unavoidable but you should avoid high interest rates whenever possible. Even if the loan is not paid off immediately, interest rates can add up to thousands of Dollars over the loan's life.
A direct payment to your college is another way to avoid high interest rate. Many colleges offer affordable, interest-free payment options. Paying in installments is better than paying all at once, and it may also be possible to ask family and friends for financial aid. Another option is crowdfunding. Although it is still relatively new in student loan debt, it is rapidly growing in popularity.
Avoid spending too close to the upper limit
A college student's best chance to build credit is to be able to match your spending with your income. Do not accumulate a large card balance. This will result in high interest payments and a poor credit score. You credit score will also be affected depending on how much credit you have.
As a college student, it is vital to use credit cards carefully and pay them off in full each month. In college, a young person will be able to take financial responsibility for their finances. Carrying a large, unpaid balance is a quick and easy way to fall behind on your payments. Set limits for your credit cards and plan ahead how you will pay the bill each month.