College comes with so many new experiences – first time living without your parents, not having a curfew, and you can even eat ice cream for dinner!
College also comes with an abundance of new responsibilities. Many students are paying their own bills and establishing credit for the first time.
Having an established credit history is important in many facets of life, from renting an apartment, buying a house, to even applying for a credit card. But this is where it gets tricky.
How are you supposed to get a credit card or a loan without an already established credit history?
There are several ways you can establish a credit history both with and without a credit card.
How to build your credit
Get a credit card
If you’re building your credit history from scratch, the easiest way to get started is by applying for a credit card. Without a credit history, your credit card options will be quite limited.
Luckily, some cards are created specifically for students that have some fun rewards and perks.
If you’re not interested in a student credit card, you can also apply for a secured credit card. These cards require a deposit to open the account, which is usually equal to the spending limit.
You can also ask a parent or guardian to become an authorized user on their credit card. If the card reports authorized users, you can build credit without having to have a credit card of your own.
Regardless of what you choose, it’s crucial to make payments on time and spend wisely. You also want to set the groundwork for a great credit score when establishing a credit history.
Build your credit with bills you’re already paying
Part of building a healthy credit history is making payments on time. Things like gym memberships, medical bills, and insurance payments don’t appear on your credit report. However, if you stop making payments and the bills are put into collections, it will negatively impact your credit score.
Take out a loan to help build your credit
Taking out a loan and making payments on time can help build your credit score and establish a credit history.
When starting to build your credit, remember to do so responsibly. Don’t take on loans you can’t afford or accept a credit card if you’re not comfortable with the terms. If you’re financial future and you want to be sure you’re setting yourself up for success.
There are also free tools available like the Chase Credit Journey tool that allow you to keep an eye on your credit score so you can easily track your progress.