What is a credit score
Your credit score is a three digit score assessing your credit responsibility and safety. It’s a measure used by banks to determine how reliable you will be with loans. The use cases can range from car loans, mortgages, credit cards, and more — any loan you take out will be affected by your credit score. The higher your score, the more reliable you are and the lower interest rates you will pay. Many factors like total outstanding debt, number of open credit cards, and payment history are used in calculating your credit score. Because your credit score is cumulative, starting to build your credit score in college can help with your future financial needs.
Ways to improve credit score
Despite the importance of credit scores, many college students don’t even think about it. There are three easy steps a college student can take to improve their credit score. Namely, becoming an authorized user, getting a student credit card, and maintaining a solid payment history.
Becoming an authorized user may be the easiest way to improve your credit score. All this requires is getting a parent or guardian to add you to their credit card as an authorized user. As an authorized user, you’ll have access to your parent or guardian’s credit line — should you need, you have access to a much higher credit line than you could access yourself. However, you don’t need to use the credit card to reap the benefits, you can improve your credit score just by being an authorized user. Also, an authorized user doesn’t bear any legal responsibilities to pay off debt, so this can be a good way to learn to use a credit card responsibly.
A student credit card is another great option for college students. These credit cards are built with college students in mind — unlike most credit cards, they don’t require a credit history. Furthermore, they also offer student specific perks like amazon prime or music subscriptions. A drawback is a lower credit limit and a higher APR (interest), but if you’re a responsible spender, these shouldn’t affect you.
The last, and most important tip is to maintain a solid payment history. This may sound easy and simple, but maintaining a solid payment history will have the biggest impact on your credit score. Not only can monthly, on time payments help avoid fees and interest payments, it can also greatly boost your credit score.
How to check your credit score
After all these tips on improving your credit scores, you may be wondering how you can check your score. Checking your credit score isn’t as arduous of a task as many may believe. First, head over to AnnualCreditReport.com, the only website authorized by the federal government to issue free credit reports. Then, fill out a quick form with your credentials and pick where you want your report from (there are three credit agencies to pick from). That’s it, you can access your credit score on the website after completing those easy steps.
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