How to Build Your Credit Score as a College Student

a student buys books with her credit builder credit card

Understanding credit cards and building credit might seem like a task for later, perhaps after graduating college. Yet, the reality is that you can kickstart your credit journey at 18 or older. Starting to build credit while in college is more than a smart move; it’s a step towards financial independence, helping you make money-related decisions without needing a parent or guardian co-signer. But where to begin? We are here to break down the basics of credit, tell you why it matters, and help you build a credit score. Plus, we've uncovered the perfect secured credit card tailored for college students.

What are Credit Scores?

Credit scores are three-digit numbers ranging from 300 to 850 which serve as a “report card” for your spending habits. These scores provide lenders with a way to gauge how likely borrowers are to repay money. It makes sense—why would anyone lend money if there is a high chance it won't be repaid? The higher your number, the better your credit score. Several factors influence a credit score, including your payment history, credit utilization ratio, length of credit history, mix of credit types, and recent credit applications. Just like your college GPA, your credit score evolves as your credit report changes.

Why Should College Students Start Building Credit?

Getting a head start on building your credit while in college is a wise choice. One significant perk of having a credit card during those years is the potential to graduate with four years of positive credit history. Now, why does that matter? Well, because your credit score plays a key role in various life milestones—buying a car, landing a job, renting an apartment, or even purchasing your first house. Having a strong credit score is your ticket to easy approvals and better rates on everything, which could potentially save you thousands of dollars!

Learn more about the impact of credit in our recent blog: Why College Students Should Have Credit Cards.

How to Build Credit as a College Student

While there are multiple ways to improve your credit, here are the most important methods for college students to remember:

1. Meet Payment Deadlines

Maintaining a strong track record and keeping up with credit card payments is the most important element of building your credit score. Your payment history contributes to 35% of your credit score, demonstrating your ability to handle credit responsibly. Any slip-ups (like missing a payment or falling short of the minimum balance requirements) are reported as issues to credit bureaus. These missteps can stay on your credit report for years, impacting your score. On the flip side, consistently paying your bills on time can significantly boost your credit score.

Using credit responsibly also comes down to making purchases that you know you can pay off in full. For college students, we recommend starting small by only using your card for meals, gas stations, and school supplies.

HELPFUL TIP: Set a monthly alarm/notification as a reminder to pay off your credit card. This ensures you will stay on top of your payments without missing a deadline.

2. Stay Aware of Credit Utilization

As we highlighted earlier, payment history is one of the main factors in calculating your credit score. The other major influence is credit utilization, which measures the balance between the credit you have and the credit you actually use.

Many people assume that using your credit card frequently is the key to boosting your credit score. However, in truth, it's not about racking up high numbers but maintaining consistent activity. Experts recommend keeping your credit utilization below 30% of your total available credit. For example, if your credit card has a $1,500 limit, you should use no more than $500 at any given time. Striking this balance ensures that you are handling your credit well and boosting your credit score positively.

3. Review Credit Statements and Reports

Keeping an eye on your monthly credit card statements and yearly credit reports is a crucial step in maintaining a positive credit history.

Firstly, by regularly checking your credit card statements, you have the opportunity to detect suspicious activity and fraudulent charges, which could lead to significant credit problems. If you spot anything fishy, report it to your bank immediately—your account might be compromised. Failing to report this activity quickly could result in your account being maxed out, negatively affecting your credit score due to someone else's wrongdoing.

In addition, it’s smart to review your credit report at least once a year so you can understand your credit standing. Thanks to federal law, you can receive a free credit report annually from the major credit reporting companies (Equifax, Experian, and TransUnion). Your credit report will provide a breakdown of how you are doing financially, and it can help you think about what improvements you can make for the future.

4. Start with One Card

After securing approval for your first credit card, the temptation to apply for another may arise. However, it's not smart to apply for multiple credit cards in a short timeframe. Here's why:

Potential lenders might raise eyebrows if they notice you applying for several credit cards simultaneously. This action could be perceived as a desperate effort to get credit, signaling risk or financial instability—not characteristics lenders typically embrace.

Each credit card application triggers a hard inquiry on your credit report. These inquiries can lower your credit score in the short-term, meaning that multiple inquiries may cast you as a long-term credit risk. Therefore, for college students, our suggestion is to stick with one secured credit card.

5. Use a Secured Credit Card

For college students looking to establish credit without the fear of overspending, a secured credit card offers a fantastic credit-building option.

Students without a credit history often find secured cards accessible due to their unique setup. Similar to a debit card, a secured credit card is backed by a cash deposit. This deposit becomes your credit limit, allowing you to spend only the amount you have already deposited on the card. For instance, if you deposit $450, that means your credit limit is also $450. However, failing to pay your bill enables your bank or credit union to deduct the owed amount from your deposit. Unlike debit cards, the activity of secured credit cards is reported to credit bureaus. This gives you recognition for your positive financial behavior, impacting your credit score.

Using your secured card for small daily purchases becomes an effective strategy to strengthen your credit score, opening doors to unsecured credit cards in the future.

Building Your Credit Score with a Secured Credit Card from Academy Bank

It's time to kickstart your credit journey! Whether you are starting from scratch or aiming to boost your score, the journey begins now, and a secured credit card is your ideal companion. By practicing good credit habits such as timely payments, maintaining low credit utilization, regularly reviewing your credit report, checking for suspicious activity, and sticking with one card account, a secured credit card becomes your trusted ally in building credit.

Academy Bank's Credit Builder Secured Visa® Credit Card stands out as a top choice for college students. Using this card to build a strong credit history creates opportunities for potential upgrades to unsecured credit cards, complete with additional perks and bonuses down the line.

What makes Credit Builder so great?

  • Customizable credit limit, ranging from $300 to $3,000
  • Automatic reporting to the three major credit bureaus, accelerating your credit history buildup
  • No annual fees, application fees, and over-limit fees
  • Ability to make quick online transactions with the convenience of Visa® Secure Remote Commerce

Applying for the Credit Builder Secured Visa® Credit Card at Academy Bank is a breeze—just provide your driver's license or government-issued ID, social security number, date of birth, current home address, and email address. Get started on building better credit today.

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Subject to credit approval. Transaction and Penalty fees apply.  Credit Builder Savings account required. $5.00 quarterly fee charged to the Credit Builder Savings account if not enrolled in eStatements. Improved credit score is not guaranteed. Credit score is determined by credit reporting agencies based on multiple factors, but satisfactory performance on a credit card product can improve your credit score. Default on a credit card, including missed or late payments can damage your credit score. Once added, funds cannot be withdrawn from the Credit Builder Savings account and the Credit Builder credit card without closing the savings account and the credit card.