How to Start Building Credit in College
Building credit is something most college students know they need to do. Establishing a credit history and having good credit are musts for becoming financially independent – without it, it can be very difficult to qualify for loans, rent an apartment, and even get certain jobs – but knowing where to start can be confusing. We break down some simple strategies on how to start building credit below.
How do you build credit?
Become an authorized user on your parents’ credit card account
Simply put, being an authorized user on your parents’ account basically means you’re using their credit card, but you have your own card with your name on it. When you’re building credit, this the best of both worlds. You can buy things on the card like it’s yours, but it’s still the primary cardholder’s legal responsibility to pay for the charges. You might have to pay your parents back, but hey, you’ve got plastic!
As long as your parents maintain a good credit history by making on-time payments without carrying a large balance, your credit report will get a boost. The credit card company should report the account activity to both your and your parents’ credit profiles, but you can always check first to see if the credit card company reports authorized user accounts to credit reporting agencies.
Apply for a secured credit card
If you know you’ll always be able to pay off the balance every month, think about applying to get your own secured credit card. A secured credit card requires you to put down a cash deposit (usually equal to the same amount as your credit limit on the card) to open an account, reducing risk to the credit card company. Like being an authorized user on someone else’s credit card, this is a good way to build credit, and the required deposit makes it easier for people with a short credit history (or bad credit) to open an account.
A good tactic when getting your first credit card is to use it only for small purchases (like gas or your Netflix subscription), then pay the balance off in full every month. Avoid the urge to splurge to prevent your credit balance from ballooning to an amount you can’t afford to pay back.
Credit cards aren’t one size fits all, so make sure you do your research before you apply for one. Things like annual fees, interest rates, and credit limits can vary from card to card. It’s important to know what you’re getting into before you sign up.
Apply for a student loan
As a college student, you might already have student loans, and the good news is, they’re helping you build credit! Any student loans you’ve borrowed, whether federal or private (even if you have a cosigner), are reported on your credit report when they’re taken out.
Keep your student loan balance as low as possible to make it easier to make on-time payments on it in the future. This will help you build credit history without getting into debt you can’t manage.
Stay on top of your student loan payments
Missing student loan payments can have a big negative impact on your credit score. Don’t just rely on your loan servicers to remind you when you need to pay your student loans. Set reminders each month to make your payment on time, or set up an auto-debit to minimize the worry. (Bonus: Many private lenders offer a discount on your APR if you sign up for auto-debit.) If you know you’re going to have trouble making a payment, contact your loan provider. Chances are, they’ll be willing to work with you if you reach out beforehand to let them know of the problem. After you miss a payment or two? Not so much.
NOTE: You don’t have to wait until you have to start paying off your student loans to make payments. If you can, start paying off your student loans while you’re still in school to minimize debt after graduation. Even if you’re only making interest payments, it can make a big difference in the amount you have to pay later!
Pay your bills on time
Credits cards and student loans aren’t the only things that affect your credit. Even things like cell phone bills, paying your rent, and utility payments can be reported to a credit reporting company. Always pay your bills on time to prevent a missed payment from hurting your credit.
Don’t apply for too many accounts at once
It may seem like a good thing to do when you’re trying to build credit, but credit inquiries (where companies ask a credit reporting agency for your credit report after you submit an application) can lower your credit score, especially if you have multiple inquiries in a short amount of time. People with short credit histories can especially be seen as riskier borrowers because they don’t have a long track record of paying off their debt. Keeping your number of credit accounts low shows credit reporting companies that you are a responsible borrower, and using the accounts you do have wisely will help build a positive credit history.
Dos and Don’ts of Building Credit in College
The bottom line is, managing money responsibly, making payments on time, and keeping balances low are key to building good credit. Here are some dos and don’ts to keep in mind.
- DO start building credit early
- DON’T get a credit card if you can’t pay it off in full—and on time— every month
- DO keep your student loan balance as low as possible
- DON’T miss any loan payments
- DO pay your bills on time (including rent, utilities, cell phone bills, etc.)
- DON’T try to open a lot of accounts at once
What to do next?
Private Student Loans vs. Direct Stafford Loans
How to Find a Cosigner
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- Competitive fixed and variable APRs starting at 4.74%1
- Multiple repayment options including: full principal and interest, interest-only, deferred, and flat payment
- Flexible payment terms ranging from 5, 8, 10, and 15 years2
- Coverage up to 100% of your school-certified cost of attendance ($1,000 minimum)3
- No origination, application and processing fees, no fees for early repayment
- Apply online in 3 minutes and get an instant credit decision
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
2This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
3As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 03/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
- Variable Rates: 5.49% APR - 15.83% APR. Fixed Rates: 4.50% APR - 14.83% APR. Lowest rates shown include 0.25% interest rate discount with auto debit payments.1
- Apply online in minutes and receive an instant credit result2
- Multiple repayment options from in-school payments to deferred.1 No origination fee or prepayment penalty3
- Last year, students were 4x more likely to be approved with a cosigner4 and it may help you get a better rate.
- Borrow up to 100% of school-certified expenses, whether you're online or on campus5
Borrow Responsibly
We encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Students and families should evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan.
Loans for Undergraduate & Career Training Students are not intended for graduate students and are subject to credit approval, identity verification, signed loan documents, and school certification. Student must attend a participating school. Student or cosigner must meet the age of majority in their state of residence. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident), and provide an unexpired government-issued photo ID. Requested loan amount must be at least $1,000.
1Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment.
2In 2021, instant credit decisions were provided to 97% of applicants. Other applications typically received credit decisions in 3 to 5 business days.
3Although we do not charge a penalty or fee if you prepay your loan, any prepayment will be applied as outlined in your promissory note-first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.
4Based on a comparison of approval rates for Sallie Mae Smart Option Student Loans for Undergraduate Students who applied with a cosigner versus without a cosigner during a rolling 12-month period from October 1, 2020 through September 30, 2021.5 For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website may be subjected to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time.
6 Examples of typical costs for a $10,000 Smart Option Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment may receive a loan term that is less than 10 years.
Information advertised valid as of 02/27/2023
SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.
Smart Option Student Loans® are made by Sallie Mae Bank. Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their respective owners.
Edvisors is not the creditor for these loans and is compensated by Sallie Mae for the referral of Sallie Mae loan customers.
© 2023 Sallie Mae Bank. All rights reserved. SLM Corporation and its subsidiaries, including Sallie Mae Bank are not sponsored by or agencies of the United States of America.
- AFFORDABLE variable rates starting at 5.86% APR with Automatic Debit Discount*
- 1% CASH BACK Graduation Reward*
- NON-COSIGNED option may be available for undergraduate juniors and seniors.
- PAY AFTER LEAVING SCHOOL – Customize your loan with flexible repayment options – start payments after graduation.
- FORGET FEES – No application, origination or disbursement fees. No prepayment penalty if you choose to pay your loan off early.
- COVER UP TO 100% of your tuition and eligible living expenses.
* Ascent's undergraduate and graduate student loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs
Rates are effective as of 3/01/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: www.AscentFunding.com/Rates
1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
- Check your eligibility in just 2 minutes
- Flexible repayment options you can choose from
- No fees for origination, disbursement, prepayment, or late payment3
- Skip a payment once per year (once repayment period restarted)4
- Will cover up to 100% of the school's certified cost of attendance
- 9-month grace period (3 months more than most lenders)2
This information is for graduate and undergraduate students attending participating degree-granting schools. Borrowers must be U.S. citizens or U.S. permanent residents if the school is located outside of the United States. Non-U.S. citizen borrowers who reside in the U.S. are eligible with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident) and are required to provide an unexpired government-issued photo ID to verify identity. Applications are subject to a requested minimum loan amount of $1,000. Current credit and other eligibility criteria apply.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.70% APR to 14.85% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 14.65% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
1You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
2Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.
3Earnest does not charge fees for origination, late payments, or prepayments. Florida Stamp Tax: For Florida
residents, Florida documentary stamp tax is required by law, calculated as $0.35 for each $100 (or portion thereof) of the principal loan amount, the amount of which is provided in the Final Disclosure. Lender will add the stamp tax to the principal loan amount. The full amount will be paid directly to the Florida Department of Revenue. Certificate of Registration No. 78-8016373916-1.
4Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.
The information provided on this page is updated as of 03/08/2023. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information.
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Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget
- Variable Rates: Starting variable rates range from 4.99% APR - 13.13% APR (with autopay)*, and will never exceed 13.95% (sometimes lower in certain states as required by law)
- Fixed Rates: Fixed rates range from 4.49% APR to 13.98% APR (with autopay)*
- Easy online application!
- No origination fees, late fees, and no insufficient fund fees. Period
- Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget
- 0.25% discount when you set up autopay*
*UNDERGRADUATE LOANS: Fixed rates from 4.49% to 13.98% annual percentage rate ("APR") (with autopay), variable rates from 4.99% to 13.13% APR (with autopay). GRADUATE LOANS: Fixed rates from 5.25% to 13.60% APR (with autopay), variable rates from 5.49% to 13.07% APR (with autopay). PARENT LOANS: Fixed rates from 6.50% to 13.98% APR (with autopay), variable rates from 6.32% to 13.13% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 01/30/2023.
Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, years of professional experience, income, and a variety of other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)