After you get that first card, how can you manage your FICO score?
Good credit can open many doors. It is vital to securing a personal loan, a business loan, or buying a home. When you establish and maintain good credit in college, you create a financial profile for yourself that can influence lenders, landlords, and even potential employers.
Unfortunately, some college students do not have good credit. According to Credit Karma, the average 18 to 24-year-old has a credit score of 630. A FICO score of 730 or higher is considered good.1
What are the steps toward achieving a good credit score?
To start, you need to utilize credit. About 15% of your credit score is built on the length of your credit history, so the sooner you purchase goods and services with a credit card and pay off that debt, the sooner you create a record of credit use.1
Aim to reduce the balance to $0 every month. Does this sound like a challenge? It may not be if you only use a credit card to purchase everyday things, like gas and groceries. When you start splurging with a credit card, paying off the balance in full can become a problem.1
Pay your credit card bill on time. Roughly 35% of your credit history develops from your pattern of payments: how on time they are, how late they are. Consider scheduling automated payments from your bank account, setting up reminders, or committing to paying the bill as soon as it arrives.1
Refrain from applying for 2-3 credit cards at once. About 10% of your credit score reflects your history of credit inquiries, so if you suddenly apply for another 2-3 cards, you could hurt your score.1
Avoid jumping from card issuer to card issuer. That is, getting a credit card then closing that card account after a few months and opening a new one because you find another credit card with better perks. In doing this, you end up giving yourself a shorter credit history per credit card account.1
What if you have problems getting a traditional card? If you have no income, you might run into this. There could also be other reasons that make it hard for you to qualify. In such cases, consider going to the bank or credit union where you have a savings account and applying for a secured credit card. These types of cards allow you to transfer money into an account linked to the use of the card, and that amount represents your credit card limit. You can also ask to become an authorized user on a credit card held by one or both of your parents; just being linked to that account history could help your credit rating.1
You can potentially help your credit score in other ways. Consistent bill paying is a plus for your credit history. If you are living off campus, you'll probably co-sign a lease. Make certain you understand you and your roommates’ financial obligations, such as shared utilities costs, because if one person is financially negligent it could hurt your credit rating. With financially trustworthy roommates, you can avoid credit score damage from late or missed payments. And if you move while in college, be vigilant about having your bills forwarded to you so you don't miss them.1
Provided by Patriot Asset Advisors
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1 - thesimpledollar.com/how-to-build-good-credit-in-college/ [10/22/19]