How To Build Credit In College

By Lindsey Ryan

When you’ve flown the nest and settled into your own routine in college, it’s time to start thinking about your credit. New freedom comes with having no curfew, creating your own schedule, and meeting people who have similar interests as you. With this freedom also comes the responsibility of handling your own finances and preparing yourself for a future you’ve always imagined. 

All of this starts with building a good credit score. Some ways to build credit include making on-time payments on a low-limit credit card, paying all bills on time, using credit builder loans, and using loan cosigners. We’ll explain how to use these strategies and how to build credit in college below. 

Apply For A Credit Card

One of the best ways to build credit in college is to get a low limit credit card. Aim for a credit card with a limit of $500 or less, which you would use for small purchases and always pay back in full. That’s a key part! While it might not be as exciting as having a credit card with a $2,000 limit, keep in mind that these low limit credit cards will be easier to manage and pay back. It’ll also be easier to make payments on time and not overspend on your budget. You can use this credit card for things like groceries, books, or transportation. 

Always Pay Your Bills On Time

Paying your bills on time is one of the simplest ways to build your credit. If you’re responsible with your spending, then this one may come easy to you. You can pay back bills like student loans, utilities, and rent. Loan and credit card payments are reported to the credit bureaus to help you build credit history.

Rent and utilities payments can’t help your credit score unless they get reported to the bureaus, which companies like our partner LevelCredit can do for you! LevelCredit will report your rent, utility, and other payments to the major credit bureaus for you — and give you access to your credit score and other credit insights — for $6.95 per month. Learn more.

Ask Someone To Cosign

When you have someone cosign for you, it means you’re basically borrowing their credit history, should you need it for a loan. You can ask if a parent or someone you trust is able to cosign on a purchase or credit card for you. This is great if you have personal loans or are applying for an apartment. Auto loans or credit cards can be tricky without credit, but if you pay your bills on time, these types of loans can really help boost your (and your cosigner’s) credit score. 

The cosigner will also be responsible if you cannot pay off your debt in time. If you also make late payments or continuously miss payments, it will affect the credit score of your cosigner. The biggest thing to remember when asking someone to cosign is that they are putting their financials on the line, always be absolutely sure you can afford the payments each month before asking a family member or close friend. 

Apply for a Credit Builder Loan

Like the name implies, a Credit Builder Loan builds your credit if you have a low credit or haven’t started building credit yet. With a MoneyLion credit builder loan, there’s no credit check to apply. And 70% of people who take the loan raise their credit score within 60 days.

What makes MoneyLion’s Credit Builder Loan unique is that everyone who is approved gets up to $1,000 in immediate funding. It’s possible, depending on your finances, that a portion of your funding may be held for you in a Credit Reserve Account while you pay off the loan. The bonus is that the money in your Credit Reserve Account will earn interest! Once you make your monthly payments on time and pay off the loan in full, you’ll receive your savings from the reserve account. The positive payment history will help your credit build, as we report your loan payments to all three credit bureaus. 

Start Building Your Credit Now!

Even though you’re learning about new financial responsibilities in college, you can have fun doing so. One of the biggest lessons is to be conservative with spending on lines of credit and always pay your bills on time. By practicing healthy financial habits and building credit early, this will help you obtain the best available interest rates on things you will buy later in life like a car or home. 

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