If you’re a college student and you don’t have a credit score yet, you may have a few options to consider.
You’ve got to build your credit history to get a score. But how do you do this?
You’ll need to get an account that will report your payments to at least one of the three major consumer credit bureaus — Equifax, Experian and TransUnion.
Your specific game plan for building credit may depend on how old you are: You can legally open a line of credit even if you’re under 21, but you might need proof of income to open a credit card. If you don’t have that, you may have a parent or guardian who is willing to co-sign a credit card with you or add you as an authorized user.
It can be confusing knowing where to start, so we’ve mapped out an action plan to help guide you. Here are four ways to help you get scored.
- Consider whether you need student loans
- Become an authorized user on a family member’s credit card
- Apply for your own credit card
- Get credit for your rent payments
If you need financial aid to complete your undergraduate degree, you may want to look into federal student loans.
While private student loans may require an established credit history, most federal student loans don’t require a credit check. That means you can borrow the money you need to pay for school and build your credit by paying back those loans responsibly and on time.
If you’re not ready to apply for your own card, a trusted family member may be willing to make you an authorized user on one of that family member’s accounts.
Being an authorized user means you can use someone else’s credit card in your name. You can make purchases and use the card as if it were your own, but paying the charges legally remains the primary cardholder’s responsibility. The primary cardholder — a parent, for example — can make you an authorized user by adding your name to the credit card account. Just make sure that the credit card issuer reports authorized user accounts to the three major credit bureaus.
Being an authorized user can help your credit in a few ways, as it can positively affect factors that go into your credit score like payment history, age of credit history and number of total accounts.
Be aware that if the primary cardholder misses a payment or starts carrying a large balance, this can negatively impact your own credit.
Getting a credit card is a great way to start building your credit history.
Secured credit cards, like Capital One Platinum Secured Credit Card, are one option. To use one, you’ll need to make a deposit, which then becomes your initial credit line. With Capital One Platinum Secured Credit Card, for example, you’ll get an initial $200 credit line after making a deposit of $49, $99 or $200.
These types of cards can help you learn to manage credit responsibly, since you usually can’t spend more than your secured card deposit. Just make sure to make your payments on time and try to keep your spending under 30% of your credit limit, otherwise this could have a negative impact on your credit. Also double check that the issuer reports your activity to the credit bureaus so you can start building a credit history.
Another option is a student credit card, which is meant to give students an opportunity to build their credit. This may even come with rewards. Watch out for higher interest rates when it comes to student cards, though — paying your balance off in full and on-time each month can help you avoid interest charges and build your credit.
Paying your rent on time isn’t always reflected on your credit, but you might be able to change that. There are services out there that can help make sure your positive rent payment history is reported, which can help you build credit even without a credit card or loan. For example, eRentPayment, reports to the three major credit bureaus — Experian, Equifax® and TransUnion®.
The service may charge a small fee (eRentPayment currently charges $3 per transaction or $10 per month) and your landlord must be registered for you to be able to use it. If you have always paid your rent on time and your lease is in your name, it may be worth trying to get it reported on your credit.
It can take patience and time, but the sooner you start building your credit, the sooner you can get a credit score. Just make sure to practice smart credit habits, like charging only what you can afford and paying your monthly balance on time and in full.