Apart from furthering your education, one of the most exciting parts of growing up is learning how to manage your personal finances. Although it requires being organised, building your credit rating as a young adult is a must as it can affect everything from your ability to rent a property to taking out a cell phone plan. There are many ways to build your credit score, here is three steps that students can use to build up their credit score.
1. Get a department store card
Many students might think they will open up a credit card once they arrive at university but this isn’t easy when you have no credit history. Doing something as simple as opening a store card and religiously paying it back can enable you to apply for a credit card in as little as six months. Alternatively get a secured card by providing your bank with a small deposit of anything up to $500 as a credit limit.
2. Open up a credit card
Although you will need to be able to satisfy some legal requirements (such as proof of income) if possible, take out your own credit card at your earliest convenience. As many providers offer special student packages, you may even be able to reap the benefits of cashback, freebie vouchers or travel cards. Remember, you can always carry out a balance transfer near to the end of a period of low interest on your repayments to preserve good credit.
If you doubt your ability to get a credit card, approach your bank as your pre-existing debit card means that you already have an established relationship with a credit provider.For those unable to take a card out independently, ask your parents if they would be willing to let you become an authorised user on their account. Although it means they will monitor your spending, it is an excellent way to gently build a positive credit score.
3. Make small expenditures and pay back on time
Start cultivating the good habits that will help you manage your personal finances for your life. When you are focusing solely on building good credit, try not to carry a balance on your credit card by using it only for purchases you can afford. Only borrow what you need and remember that it is vital to make the minimum payment every month. If you can pay off the balance in full each month, so much the better.