Building Credit
Building Credit as a College Student
Credit Cards: Are they Good or Bad?
When used properly, credit cards can be a great financial tool. However, if they are abused, their use can have major negative financial consequences that stay with you for some time. Credit cards should not be used as a means to improve or support your current lifestyle. They should be used responsibly to build credit.
Before you consider a credit card, consider the following:
- Do you need it? If you don't need it, don't buy it.
- Can you pay off the balance? On all occasions, try to pay off the remaining balance on your credit card each month.
- What is the interest rate? Make sure you are aware of the interest rate before applying for the card.
- No annual fees! Try to avoid applying for credit cards that charge annual fees just to have it.
- No store cards! Avoid applying for store-specific credit cards as they typically have high interest rates and can only be used at that particular store.
- Check for student credit card options. Many credit card companies have low-interest credit card options for students with little to no previous credit history.
Why Should You Care About Your Credit Report and Credit Score?
What is a Credit Report?
A credit report is a detailed account of your credit history. It is an important measure for your financial reliability. Your credit report can be used in many different situations including applying for a credit card, buying a car, renting an apartment, buying a house, and, in some cases, applying for a job.
You can request a once per year from each of the three main credit reporting bureaus:
What is a Credit Score?
Credit scores reflect the financial trustworthiness of a borrower. A higher score signals that a consumer is less of a financial risk to the creditor. Credit scores range from 300 (poor credit) to a maximum of 850 (exceptional credit). Having a good credit score has some major advantages including, higher credit/loan limit approvals and lower interest rates.