Having a good credit score is essential for getting important loans later on. If you’re getting a car loan or a mortgage on your home, the first place lenders go is your credit score. If it’s too low or nonexistent, then it’s likely that they will give you a credit line. Having student debts can also affect your credit score, if you’re having difficulties paying them off. However, there are ways you can improve your credit score while you’re still in college.
This is one of the best ways to start improving your credit score. Not only will it help you have somewhere to save your money, but you can also keep track of how much money you have, exactly. Many students play the guessing game when it comes to figuring out how much money to save towards paying off their student loans. Having a savings and checking account will also generate you some extra money from monthly interest.
Many credit card companies are starting to develop student credit cards, with plenty of bonuses. They’re designed to help college students pay off their student loans by generating cash back for every dollar spent, or providing a percentage off on the purchase of books or other essentials for classes. These student credit cards also have a forgiveness period for students to pay off their credit card bills. They understand that paying off student loans are necessary, and are willing to compromise on payment periods.
If you already have a credit card, don’t bother signing up for a student credit card. Ensure that you use it, often enough that you can pay the bills each month. This will prove to creditors that you are reliable when it comes to paying off your debts each month, and will improve your credit score over time. Set yourself up with a budget so that you’re not overusing your card. Having both a student loan a credit card payment you can’t afford will be even more troublesome to take care of.
Having a cosigner will help you secure a loan, while you make the payments. This will show lenders that you are able to make timely payments each month. Be wary of this, however, as if you fail to pay, your cosigner will be held responsible for the balance remaining on the debt. This will significantly affect your credit score, and your cosigner probably won’t be happy that you neglected your obligations.
Building your credit score from scratch is an uphill battle, as you need credit in order to improve your credit score. However, no lender is likely to help you if you don’t have an initial credit score. You need to establish a credit history before you can even obtain a loan or a credit card. It’s a circular argument that goes nowhere, but with some help from parents or grandparents as cosigners, you can help build and improve your credit score over time.