March 2, 2022

Top 5 Ways for Students to Build Credit

Our analysis of 100s of millions of data points as part of our automated credit building advisor app leads us to note the five great ways students can build credit.

Kaye

Our analysis of 100s of millions of data points as part of our automated credit building advisor app leads us to note the five great ways students can build credit. 

Open Tradelines

If you don't have any credit cards, then get one. If you get rejected, get a secured card for now and an unsecured card next year.

Authorized User

Get added as an authorized user on other people’s accounts. Make sure that their people you trust. Yes, it’s silly, but so is in many ways the algorithm that determines your ability to repay a debt and ultimately your financial freedom, so play along.

Put Forth The Best You

Like the resume you will soon be working on, you have to make sure your credit profile (or your credit cv) shows the skills and experience relevant to your actual creditworthiness.

  1. Renting an apartment? Make sure it’s added your profile (throw in utilities as well)
  2. Had to borrow from an uncle for living expenses while in school; make sure to display your payment activity on your credit CV by reporting that to the credit firms. 

Start payments on a student loan.

Suppose you can afford to start making payments on a student loan. Usually, you end up with several loans and some with relatively small monthly payments. Extend the repayment term, so it's the lowest possible monthly payment, and starts making payments. This tells the bureaus you can handle installment payments which is a significant factor in building your score.

If you can't afford to pay the monthly payment for any of your student loans, then, if you aren’t maxing out your student loans, take out a bit more and put it aside just to use it to pay back one loan. In essence, you are borrowing from your left hand to pay back with your right hand. Since the interest rates are similar, it’s not necessarily harmful or costly, and it’s another example of its silly, but so is in many ways the algorithm that determines your ability to repay a debt and ultimately your financial freedom, so play along.

Use a tradeline/credit card.

You might be thinking, what,  I should use credit cards, and that makes me look more creditworthy. Yup, it does!

And if your following suggestion #4, put your monthly student loan payment on a recurring credit card charge (make sure it’s not more than 20% of your balance) and then have the credit card auto paid every month - set it and forget it! You will, of course, want to make sure to set up a reminder to have the money in your bank account and to have any late payments on the card automatically texted to you.

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