College is a time filled with many changes and new beginnings. It may give you the freedom to live on your own, create your own schedule, meet new people, and manage your finances. You’ll want to get a head start on your financial health, and this includes building credit as a student.
Your credit score will help determine whether or not you’ll be able to secure low-interest rates on loans and save money over the long run. Your credit score can also affect your ability to rent an apartment, buy a car, and much more. We’re going to go over how to build credit in college and share credit card tips for college students now.
Six ways to build credit in college
Some ways to build credit include making on-time payments for your loans, paying all of your bills on time, taking advantage of credit builder loans, and using loan cosigners. Here’s a more in-depth breakdown of the top ways to build credit as a college student.
Always pay your bills on time
Paying your bills on time is one of the simplest ways to build your credit. Although generally utilities and rent are not recorded by the credit bureaus, a report from a collection agency could show up and hurt your score. If you’re paying for your own utilities and rent, make sure to never miss a due date. The same goes for any debt payments, like credit cards.
Unfortunately, being a college student usually means you’re short on cash. If this is the case, you’re going to have to work hard to track your spending, maintain your budget, and ensure that you have enough money to afford all of your obligations.
All of these might sound like daunting tasks, but they don’t have to be. MoneyLion offers built-in budgeting tools and financial tracking features. With a RoarMoney℠ account, you also get a bank account and associated features.
Get a student credit card
Another way to build credit in college is to open a low-limit credit card. Ideally, this would come with a limit of $500 or less, which you would only let yourself use when making small purchases. That will make it easier to pay it back in full every month.
Remember that you’ll want to at least pay the minimum balance each month to keep your credit score up. You will pay interest if you don’t pay off the full amount, but it will show that you know how to use and manage credit.
Ask a family member or friend to cosign
Getting a cosigner makes it easier to qualify for a loan or credit card. However, keep in mind that the cosigner will be responsible for payments you miss or don’t make on time.
If you’re continuously late or frequently missing payments, your cosigner’s credit score will drop. Asking someone to cosign is essentially asking them to put their finances on the line for you, so always make sure you can afford your payments each month before asking a family member or close friend to back you up.
Cosigners should always be a protective measure, not a backup plan for paying your bills. Also, make sure your cosigner is one of your parents or someone else you can trust.
Apply for a MoneyLion Credit Builder Plus loan
A credit builder loan is designed to help you build a credit history. It can help college students as well as working adults with low credit or none at all.
Most credit builder loans keep your funds locked away until you pay a set number of required payments. However, MoneyLion offers Credit Builder Plus loans that grant you a portion of the funds that you qualify for upfront. The rest of your funds will be held for you in a credit reserve account and you will have access to that money once you pay off the loan.
Positive payment history will also help you build your credit score. With MoneyLion’s Credit Builder Plus loan, the results speak for themselves. In fact, more than half of MoneyLion members raise their score by 42+ points within 60 days.1
Make micropayments
If you’re struggling to make payments on time, one strategy that can help is known as micropayments. Paying your bills, like a car loan, in split payments rather than in full before the due date might be easier to manage and can get you ahead of any interest you’d accrue. And if you’re strapped for cash, consider taking on a side hustle, a part-time job, or another income stream to bring in extra money.
0% APR cash advances for college students
Whether it’s a spontaneous night out or your financial aid hasn’t come in yet, having access to extra cash when you need it the most can be a tremendous help. Instead of settling for expensive credit cards that can get you stuck in a cycle of debt, try opting for MoneyLion’s InstacashSM instead. It’s a 0% APR cash advance that lets you access up to $250 anytime, anywhere. Instacash works for consumers who have checking accounts and direct deposits of paychecks by their employers. No interest. No monthly fee. No credit check. Use Instacash to access fast cash as a college student today without hurting your credit score in the process!
FAQs
Q: Is a 700 credit score good for a college student?
A: Yes! No matter who you are, good credit scores in general start at 700.
Q: Do student loans fall off after 7 years?
A: There is no such thing as automatic student loan forgiveness or loan cancellation after 7 years. However, if it’s been over 7.5 years since you defaulted on your student loans, the debt and the missed payments might be removed from your credit report.
Q: Is it a good idea to pay off student loans early?
A: Probably. You’ll save more on interest if you pay off your student loans sooner than later. The only downside is that you’ll have to make larger payments, which can be difficult to manage, especially if you’re struggling with affording your other bills.
Disclosures
This material is for informational purposes only and should not be construed as financial, legal, or tax advice. You should consult your own financial, legal, and tax advisors before engaging in any transaction. Information, including hypothetical projections of finances, may not take into account taxes, commissions, or other factors which may significantly affect potential outcomes. This material should not be considered an offer or recommendation to buy or sell a security. For more information about MoneyLion, please visit https://www.moneylion.com/terms-and-conditions/.
MoneyLion is a financial technology company, not a bank. RoarMoney℠ demand deposit account provided by, and MoneyLion Debit Mastercard® issued by, Pathward®, National Association, Member FDIC. RoarMoney is a service mark of MoneyLion. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International. Funds are FDIC insured, subject to applicable limitations and restrictions, when we receive the funds deposited to your account.
Credit Builder Plus membership ($19.99/mo) unlocks eligibility for Credit Builder Plus loans and other exclusive services. A soft credit pull will be conducted which has no impact to your credit score. Credit Builder Plus loans have an annual percentage rate (APR) ranging from 5.99% APR to 29.99% APR, are made by either exempt or state-licensed subsidiaries of MoneyLion Inc., and require a loan payment in addition to the membership payment. The Credit Builder Plus loan may, at lender’s discretion, require a portion of the loan proceeds to be deposited into a reserve account maintained by ML Wealth LLC and held by DriveWealth LLC, member SIPC and FINRA. The funds in this account will be placed into money market and/or cash sweep vehicles, and may generate interest at prevailing market rates. You will not be able to access the portion of your loan proceeds held in the credit reserve account until you have paid off your loan. If you default on your loan, your credit reserve account may be liquidated by the lender to partially or fully satisfy your outstanding indebtedness. May not be available in all states.
Credit Reserve Accounts Are Not FDIC Insured • No Bank Guarantee • Investments May Lose Value. For important information and disclaimers relating to the MoneyLion Credit Reserve Account, see Investment Account FAQs and FORM ADV.
Credit score improvement is not guaranteed. A soft credit pull will be conducted which has no impact to your credit score. Credit scores are independently determined by credit bureaus, and on-time payment history is only one of many factors that such bureaus consider. Your credit score may be negatively impacted by other financial decisions you make, or by activities or services you engage in with other financial services organizations. MoneyLion is not a Credit Services Organization.
Instacash is an optional service offered by MoneyLion. Your available Instacash Advance limit will be displayed to you in the MoneyLion mobile app and may change from time to time. Your limit will be based on your direct deposits, account transaction history, and other factors as determined by MoneyLion. See Membership Agreement and help.moneylion.com for additional terms, conditions and eligibility requirements.
1. Credit score improvement is not guaranteed. A soft credit pull will be conducted that has no impact to your credit score. Credit scores are independently determined by credit bureaus. Data was sourced from credit score data from over 74,000 Credit Builder Plus members with an active loan between August 7, 2019, and February 18, 2021. Credit score improvement is not guaranteed. Credit scores are independently determined by credit bureaus. MoneyLion is not a Credit Services Organization. Credit Builder Plus is an optional service offered by MoneyLion.
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