With schoolwork, internships, a part- or full-time job, plus homework and balancing a social life, building credit probably isn’t high on the to-do list of the average college student. But it should be.

As a student, you’re probably just starting out financially and building credit is an important part of that. A good credit score matters down the line when trying to get a loan or make a large purchase.

“Credit scores are very important because credit checks are run when someone wants to rent or buy an apartment or home, a car, sign up for utilities or even get a job,” said Financial Aid Counselor and Loan Coordinator at California Lutheran University, Amy Landes.

According to money.us.com, your credit score is the number that credit bureaus use as a representation of your ability to pay back a loan. The number people are most concerned with is known as the FICO score which can range from 300-850. The higher the score, the more desirable a candidate is for a loan, an apartment or whatever the case may be.

There are different forms of “credit,” but they all include the borrower being lent money from a lender that they must pay back, either in full or through monthly payments.

Building credit takes time and requires one to show good behavioral habits of paying off debt.  There are a number of ways to start building credit.

“Having a credit card which keeps low balances and are kept open with payments made on time is one way to demonstrate good credit behavior. Having installment loans like car loans, student loans and mortgages help also to build credit,” Landes said.

Being a college student who is just starting out does have its benefits when it comes to building credit.

According to Experian.com, “college students are prime customers because they are likely to be financially successful and have proven to be loyal customers … so many students receive a variety of offers.”

However, it is beneficial to be selective when choosing a lender and only apply for cards that offer incentives that apply to what you want.

Students can also build credit by paying off any student loans they have accumulated while going to school.

According to money.usnews.com,  “you can give your credit score the biggest boost by making your student loan payments on time … So if you pay your student loans in full and on time each month, the credit bureaus will make a record of that on a continuing, 30-day basis. That will demonstrate to future lenders that you can be trusted to handle money responsibly.”

Building good credit is important, but it is easy to lower your credit score if one is not careful when managing their finances. There are also a number of ways to negatively impact your credit score.

“Not making payment on time, defaulting on debts or going bankrupt are a couple big ones,” Landes said. “It’s important to note that it takes a while to build good credit, but you can quickly and easily ruin your credit by doing some of the aforementioned things.”

Your credit score changes periodically and can have a large impact on your life, so it’s important to stay on top of your finances and be mindful of spending. Living within your budget and paying off debts on time will keep you in good credit shape.

“Start building it early by getting one or two credit cards and paying the monthly payments on time each month.  One late payment can follow you for years to come. If you get married, your partner’s credit impacts your credit score so when you’re dating, before you ask, ‘What type of food do you like?’ ask ‘What’s your FICO score?’” said Director of Career Services Cindy Lewis.

Good credit is important towards making positive choices when planning financially for the future.  The bottom line is to start building credit early and to make payments on time.

“The best advice I have is to make your payments on time, know what you owe and not to borrow beyond your means,” Landes said.

Samantha Chittenden
Staff Writer
Published March 25th, 2015