Why Your Credit Score Is Important as a Student


When you’re attending college you have a lot to worry about, such as tuition, assignments, and a part-time job or work-study job. Most importantly, you are starting to build the path of what direction your life is going to go in.

So, let’s fast forward – you just graduated and you’re on the job hunt. You may be under the impression that credit is something you’re not going to need until later on in life, but that is a misconception! Did you know your employer can look at your credit report when deciding to hire you? You will also need to have a good credit score to obtain your own apartment! Your credit score will play a vital role in your life, and college is a great time to start building up your score.

Here’s why you should focus on your credit as a student and how it will pay off down the road:

Breaking down the importance of your credit score

Your credit score is your reputation as a borrower of money, it’s an indicator of how likely you will be able to pay that money back. Your credit score helps to determine if a lender will approve you for a loan or line of credit. It also determines what type of interest rate you will receive on the loan. People who have good credit scores are seen by lenders as trustworthy borrowers. Those who have bad credit are viewed as risky borrowers who may not be able to repay the money back. Your credit score offers lenders a snapshot of your financial history to determine if you’re fiscally responsible or not. Generally a credit score below 650 is considered bad. A good credit score is 730 or higher, though the models and ranges can vary slightly.

Start building your credit as early on as possible

According to FICO, 15% of your credit score is based upon the length of your credit history. Therefore the earlier you start building your credit, the more you can reap the rewards. Once you graduate from college you are going to want to be independent. That all starts with being able to be financially independent.

How you can start building your credit as a student

There are tons of ways you can start building your credit as a student. The most important aspect is being responsible.

If you feel as if you may not be responsible enough to start building your own credit, you can become an authorized user on your parents’ account. This will allow parents to monitor their child’s spending and see if they’re following their budget. Since, it is a joint account, if a parent is building good credit, this enhances their child’s credit as well. This may be your only option for building credit if you do not have a steady source of income.

If you do have proof of a valid income, it may be time to apply for your own credit card. Some credit card companies don’t issue student credit cards, while others offer many options for student credit cards. If you do decide to apply for a credit card on your own, know that you should be making purchases wisely so you don’t end up struggling with debt. A big part of building your credit is making sure you pay your bills on time and that you aren’t carrying a large balance on your card. Don’t be so eager to pick just any credit card. Make sure you get the right card for you! This will require you to do some research, which if you’re a student, you’re probably quite proficient at! Make sure to research annual fees, interest rates, credit limits, and billing policies.

While you’re learning all types of informative material in college, learning about credit scores most likely isn’t on your class’s syllabus. That’s why we took some time to stress to you the importance of a credit score. Building your credit is not something you’re going to want to put off like your assignment due tomorrow!

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