How to build credit as a college student

If you’re using credit responsibly, there are several ways to establish credit as a college student. They include getting a credit card and becoming an authorized user. 

Good credit can put you in a better position as you work toward life goals like leasing an apartment, buying a car and buying a house.

What you’ll learn:

• College students can establish and build credit over time by using credit responsibly through good financial habits.

• A student credit card or a secured credit card can be good options for young adults working to establish credit.

• Monitoring your credit scores and credit reports can help you learn where you stand and how to improve your credit scores.

You can use a credit card to build credit as long as you use it responsibly. But as a college student, you might not have an established credit history, which can make it difficult to get approved for a card. 

But you may have options. Common credit card options for college students include:

• Student credit cards: A student credit card can be easier to qualify for than other unsecured cards because they’re designed for students, who may not have much credit history.

• Secured credit cards: A secured credit card requires a security deposit that acts as collateral for the card issuer. A secured card may be an option if you have trouble qualifying for unsecured options.

If you can’t qualify for your own credit card right now, you could ask a trusted friend or family member to make you an authorized user on one of their credit card accounts. 

Some credit card issuers report the card activity of authorized users to the credit bureaus, which then include that information on credit reports. That can help you start to build credit. 

But if information doesn’t appear on credit reports, it can’t help. And if issuers report negative information—for example, spending more than the account’s credit limit or making late payments—that could negatively impact your credit.

Before you start building credit, it can help to understand factors that affect your credit scores. Learning to manage your money is a useful skill no matter what. Plus, it could also help prepare you for having a credit card.

Creating a budget can help you get a clear picture of how much you’re able to spend each month and where your money’s going. The U.S. Department of Education has advice on how students can create a budget. 

Once you have a credit card, budgeting could help you limit your spending. And that can help you maintain a low credit utilization ratio, a key factor in credit scoring. Your credit utilization ratio is the amount of credit you have versus the amount you’re using. The Consumer Financial Protection Bureau (CFPB) recommends keeping your utilization under 30%.

Payment history is the most important credit-scoring factor. Late payments can harm your credit scores. Plus if you pay even one day late, it could mean late fees and interest charges. To help pay on time, you could set up electronic reminders or automatic payments, if possible.

Credit applications typically trigger hard credit inquiries, which could temporarily decrease your credit scores. The effects of a single hard inquiry may be temporary. But the CFPB still recommends applying only for the credit you need.

If you have student loans, they can help you establish and build your credit history. That’s because the amount you borrow for student loans and your repayment history will show up on your credit reports. 

Many federal student loans don’t need to be repaid until at least 6 months after college. But there are benefits to paying student loans while in school. Doing so can help establish payment history and reduce the overall cost of the loans.

Once you’ve established credit, you can start monitoring your progress by checking your credit reports. Reviewing your reports regularly can help you spot inaccuracies, which could negatively impact your scores.

You can get free credit reports from the three major credit bureaus, Experian®, Equifax® and TransUnion®, at AnnualCreditReport.com. 

You could also monitor your credit with CreditWise from Capital One. CreditWise can be especially helpful for students, giving you unlimited access to your credit report and score. It’s free, and using it won’t hurt your credit scores.

With time, patience and the right tips and tools, you can work toward building a strong credit profile, even during college. Taking steps like getting a credit card or becoming an authorized user, creating a budget, and using credit responsibly could help set you up for success.

If you decide you’re ready for a credit card, a student credit card from Capital One could be a good fit. You could start to build credit with responsible use while you’re in school—and earn rewards while you do it.