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How To Build Credit As A College Student

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Congratulations, you’re in college and on the threshold of adulthood. Along with being an adult, however, you’ll get to pay bills and take out loans. Having good credit goes a long way in helping young adults when it comes time to purchase big ticket items. A good credit score also counts heavily towards important things like rental applications and can even impact jobs. 

So, it’s how do you develop that strong credit score when you’re just starting out? To build credit as a college student, you’ll need to responsibly use credit and establish a history of making on time payments. 

The easiest and best way to do this is with a credit card or a loan. Both are discussed below.

As a student, you may have very little, if any, income. I’ll show you some options for that. I will also cover how your student loan might help you build a positive credit history.

Student bank accounts and credit cards are frequent question topics that I will also discuss. And, although I do expect you to do your own homework (sound familiar?), I’ll point out a few cards that you will want to stay away from.

How Can College Students Build Credit With No Income?

If a stranger walked up to you on the street and asked for $100, would you give it to them? Probably not. 

The same goes for a financial institution or credit card issuers. They don’t know you, but you are asking for them to provide you access to money.

Well, believe it or not, it is possible to build credit even while not making an income. Most credit card issuers and lenders – but not all – will require a little help from someone else, such as a family member who already has a good established credit history.

Let’s start with those that will require some help.

One great option for building credit is to start out by talking someone into letting you be an authorized user on their account. If you decide to go this route, though, make sure the credit card issuer reports ALL authorized users to the credit bureaus. 

Also make sure the person whose card you are added to has good credit history of their own. Being a part of someone else’s bad credit is not going to help you.

The sweet part of this deal is that since you have no income, you don’t have to actually use the card for it to help you. The not so sweet part is that if you do actually use the card, you’ll also have to convince someone to give you the money to cover your purchases. 

Another way is to get someone to cosign for you on a regular credit card. This is similar to being an authorized user except that it is your own card, not theirs. Also, similar to being added to someone else’s card, is that they could be held responsible for the credit card bill. In order for a credit card to help build your credit, it has to actually be used. That means it also has to be paid.

Hopefully, anyone willing to cosign for you understands that you have no income and already knows that they may very well need to make the monthly payments.

And, even if you talk someone into cosigning for your first credit card and making the payments for you, you will still have homework. You’ll have to do some research to find best credit card for this situation because not all credit cards will allow for a cosigner. 

But perhaps when you asked to be an authorized user or to be a cosigner, the person you discussed it with laughed at you. Or maybe you don’t know anyone with a solid credit history that you want to be associated with.

Whatever the reason, there are a couple of options that may work for you – maybe. 

One option is to open a secured credit card. A secured card is backed by your own money that is used as a security deposit. If you have the money to put into the deposit, you have a very good chance of being approved for new credit card without anyone else’s help.

One warning here though. Make sure it is a secured credit card and not a debit card. Debit cards do not report your card purchases and payments to the credit bureaus. If they don’t report it, it is not helping build your credit.

I have one more option for you if you don’t have an income, but you may not like it.

Get an income (gasp!). I know you are overwhelmed with homework and barely have time for anything else. But hear me out on this. I’m not recommending a full time job. Get a part time job that is just a few hours a week to bring in some income. It may seem like a lot to take on, but people do it all the time.

Having a job can provide a few benefits:

  1. It can provide a sense of achievement
  2. It gives you some financial independence (and the 70/20/10 Rule of Money can help you stay financially on track)
  3. It could improve your chances of getting your own credit card
  4. It just might prove to others that you are responsible enough to make you an authorized user on their credit card account or cosign for you
  5. You could start paying toward your student loans early.

Do Student Loans Build Credit?

Did that last bullet point catch you off guard? After all, you are probably not required to start paying on your loans until you graduate. So, why would you even think of starting to pay off your loan now?

If the loan is in your name, then starting to pay your loan now has a couple of advantages. One is that you will get ahead of your debt and could graduate with little, or even ZERO, debt. This is a big advantage.

Another big advantage is that, yes, making regular payments towards your federal student loans does actually help you build your credit (the same goes for paying towards private student loans). Your regular and timely payments will be reported to the credit bureaus. This in turn shows credit card companies and other lenders that you’re a responsible and worthy borrower.

Do Student Bank Accounts Affect Credit?

I need to defer to the old “yes and no” or “it depends” on this one. Let me explain.

Just having a bank account – student or otherwise – does nothing to improve your credit. However, if you over withdraw your checking account or incur late fees / penalties, it will hurt your credit. I know it does not sound fair, but hey, you are an adult now and if you haven’t already noticed, life isn’t fair.

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So while having a student account with actual money in it is admirable, there is nothing to report to credit agencies. It is when you start spending irresponsibly that your financial behavior is reported. 

Being financially irresponsible is an all too real threat of “this will go on your permanent record”.

Do Student Cards Build Credit?

Absolutely yes, a student credit card will build credits, if it is used responsibly. In fact, these may be one of the better ways for a student to build credit. But they are not all sunshine and lollipops. You need to be aware of the good, bad, and the ugly about them.

The Good: Student credit cards are created specifically for students. In fact, because of your low income or lack of income, a student card may be one of the few types of cards you can get.

The Bad: Legislation, or to be more specific, The Credit Card Act of 2009. If you are under 21, and have no income, you are required to have a consignor. The Act doesn’t state how much income you must earn. But it does specify that, without a consignor, your maximum spending limit for a year is the greater of 20% of your annual income or $500.

The Ugly: Although a student card might be a good way to build your credit, it could be your worst nightmare. If you are not responsible and end up making late or missed payments, you can hurt your credit. Something to always remember is that it is super easy to drop your credit score but so much harder to build it back up.

But, not all credit cards are the same, as you’ll see in the next section. 

What Credit Cards Are Bad For Students?

Ah, nice try, but I am not going to list specific credit cards to avoid. What I will do is list some things to avoid with credit cards.

  • If you have little or no income, you really want to avoid credit cards that charge an annual fee (wait a second, that is actually pretty good advice no matter how much income you have!)
  • You may not have a lot of choice here, but you’ll want to get as low of an interest rate as you can. Why, you may ask? Well for starters you don’t have a lot of money to begin with. Lets say something happens and you end up charging $500 to your card. And, let’s say it takes you a year to pay it off. If you have a 9% annual fee, that is $45. Up that fee to 18% and you will be paying $90. Up it again to 36% (yes that high rate is out there), and you will be paying a total of $680 for your $500 loan.
  • However, if you are really responsible and can pay it off before the end of your grace period, usually about a month, you will pay no interest. Paying off your card every month is another tip that is good for everyone, not just students.

And in case you are wondering, yes, the money you spend, or charge, on a credit card is actually a loan. Use it wisely.


So there you have it. You now know some simple steps for how to build credit as a college student.  

To recap, in order to build credit, you’ll need to show financial responsibility and establish a payment history of making on-time payments. The easiest way to build your credit is with a credit card or a loan. Having an income of some type would be beneficial too.

As a student, you may have very little, if any, income, but there are still some options for you. One of them is to get a part time job. Even your student loan could be used to help build your credit. 

Student bank accounts may not help your credit, but they can hurt it terribly if you are not careful. 

Student credit cards can be a great way to help build your credit. And, although I did not specify which credit cards to avoid, I did point out some things for you to be aware of so you don’t hurt your credit.   

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