Building Credit as a College Student: Tips for a Strong Financial Future

Building Credit as a College Student: Tips for a Strong Financial Future

Reputation is a word that describes what people think of you, and it’s going to have an impact throughout your life. You have a reputation already as your teachers, sports coaches and relatives think of you in a certain way, and if asked by someone, what they tell them contributes to your reputation. Hard-working, trustworthy, careful, friendly, likeable, passionate, talented are all words we would all like to have attached to us. Dishonest, untrustworthy, lazy, apathetic, easily led are those we would hope to avoid. 

Reputation is not just a matter of opinion; as soon as you enter the banking system, in other words get yourself a bank account, you will be judged by how you conduct it. Overdrawing without authorization isn’t going to result in a slap on the wrist. It’s going to go down in black and white, and while it may be a minor incident that happened because you weren’t paying attention to your bank balance, it can be the first step on a slippery slope that leads to financial trouble that can follow you forever. Here we share tips that can prevent you from sliding down that slope. 

Take Money Seriously

There is a simple way to avoid trouble: be mindful of what have and don’t have. If you don’t have the money, you can’t spend it, so think of another way to approach whatever the issue is. But if you abuse your overdraft, you are spending someone else’s money, and nobody likes that.

Debt is Not Necessarily a Bad Thing

Here’s the anomaly in that many people go through life owing money to the bank while maintaining a good financial reputation. They do that by paying loans back according to the terms and conditions they agreed to in the first place. This is not an old-fashioned gentlemen’s agreement-type thing. It’s a legal contract and if you breach it, there could be legal trouble. 

If you honor the terms of the deal, everybody’s happy and the lender can speak highly of you. That is backed up by a computer-generated figure called a credit score or credit rating. Computers are unsentimental, they deal in facts and figures. If you pay back a loan consistently and on time, you can get a solid credit rating. If not, you will get a bad one.

Start as You Mean to Continue

Look up a phrase like student’s guide to credit. That can give you some ideas about the whole thing. Think about how you spend your money – what you spend it on. Do you really need this do you have to do that? Getting a credit card for the first time is a big step, and not all cards are the same. You have probably noticed advertisements for credit cards for students: gold cards, cards with fancy names that all want to sound attractive. 

They talk about things like APR: the interest rate you’re going to have to pay, because credit cards don’t come free of charge. They are essentially regular loans, and you must pay for the privilege of temporarily using the bank’s money. With your first card, your credit limit will probably be quite low, a few hundred dollars, maybe. But act responsibly, try to pay the whole amount off every month, and sooner or later they’re going to increase the limit. The more they let you have, the more they’re going to get back, and that’s how financial institutions make money.

Choose Your Card Carefully

You can look up a guide to student credit cards online to see what’s available. Understand the jargon so you can see what’s a good deal and what may not be. Then apply online, and if they give it to you, start to use cautiously by staying within budget. Discipline is the word here. You might feel like a kid in a candy store but remember the candy doesn’t belong to you and if you eat it, you’re going to have to replace it.

You Won’t Be a Student Forever

Aa a student in the financial world you start small, because you don’t have a real income. But soon you’ll be out there in the world with a job and a salary, and a reputation. Better make that reputation a good one.