6 Ways to Responsibly Build Credit

Credit scores are used as a measure of your worth and should be ranked high on your list.

Your credit score is used to determine the likelihood that you’ll repay a loan and lenders turn to your score to determine how much they will loan you and what interest rates will be applied. The better your score, the lower the interest rates on the loans you borrow.

Here are 6 steps to responsibility build credit while in college. Follow these steps to establish a credit score that will help you after graduation when it’s time to consider applying for a mortgage or getting a new car.

  1. Think before borrowing
    When it comes to borrowing, be smart about what you’re borrowing and understand that for every time you borrow, you’ll be paying back more than what you’re actually borrowing. It’s called interest. The more you borrow, the more you’ll pay out in interest which means the less money you’ll get to keep for savings or to spend on things you want. Credit can be risky so always consider your next move before making purchases.
  2. Start small
    The hardest part about establishing credit is getting started. For college students, it
    can be difficult to get approved for a credit card with no prior credit history. So how do
    you get started?

    • Apply for a credit card with a local credit union: It’s often easier to get a credit card with a credit union than it is with a bank.
    • Use a secure card: With a secure card you make deposits that become your credit line.
      Remember to only use 30% of it to help establish credit. Secured cards come with advantages and disadvantages, be careful as the fees are usually higher for secured cards.
  3. Know how much is enough
    The amount of credit you have accounts for 30% of your score, the second highest factor. Be sure to use just a fraction— 30% or less—of your available credit to pump up your credit score. That means if your credit line is $300, you should only borrow $90 or less.
  4. Keep a budget
    It’s important to keep a budget, but more important that you actually implement it. By creating a spending plan you know exactly how much money you have coming in each month and how much you have to spend on specific categories. Being aware of your financial situation puts you in control and will allow you to make wise decisions when it comes to credit. You’ll know exactly what you can afford to borrow and how you’ll repay it.
  5. Always pay on time
    Making payments on time is crucial to establishing a good credit score. FICO calculates your credit score based on five different factors and on time payment history accounts for 35% of your score, more than any other factor. Set up calendar reminders for when payments are due or set up automatic online billing so that you never miss a due date.
  6. Monitor your credit report
    Sometimes mistakes happen, but mistakes on your credit report can hurt your score. Be sure to monitor your credit report and see what creditors are reporting to credit agencies. You can get a free credit report once a year by visiting AnnualCreditReport.com.

Our Go Commando app empowers students to fight debt by giving them access to jobs with brands right through their mobile devices. We give you access to a market of jobs you can do right from your college campus and get paid for it. Start making money now to help repay your loans by downloading the Go Commando app from the App Store or Google Play. It’s free, simple and easy to get started.

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