How to Build Credit as a College Student

A good credit score can help get you the best apartment on campus and a car to take you there. But building credit as a student can be tough and, honestly, really confusing. 

Simply put, building a positive credit history requires making personal finance decisions that prove you’re a responsible money manager. Older adults typically do this by paying their mortgage on time or opening a credit card and regularly paying it off.  

You’re thinking, “okay yeah, but how’s a college student gonna pay their mortgage? Or even take out a regular credit card?” Facts. Building credit as a student requires more creative methods. Don’t worry! We got you. 

This article will cover how to build credit as a college student, including real-world advice for students who want to start building credit over time—the right way—and build that bank. 

How to Build Credit as a College Student

The average credit score for college students is 630, which is considered ‘fair,’ but this score is technically on the low end. Keep reading to learn how to raise your score as a student.

Consider student loans

Around 78% of students feel they don’t have the info they need to repay their college loans. The good news is we can help you understand your loans, make a plan, and feel confident paying them off. 

First, here are some basic guidelines on student loans:

• You can pay on public and/or private lenders while in college (which helps build credit history!)

• Many loan servicers have tools that predict future monthly loan payments

• Check out this one from Sallie Mae Bank 

• Federal loan payments can be deferred under many circumstances 

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Now, making a loan repayment plan is easier with your calculated monthly total. Take into account your dream job salary (and the grunt job that will get you there) and anticipated expenses. This plan will help you budget properly and build your credit with no missed payments. 

This info is extra helpful post-diploma, but the occasional student loan payment can build credit history even while in college. Maybe you’ve paid rent this month, you’re all partied out, and you still have some extra cash left over. Send some towards your loans and watch your credit grow!

Open a student credit card 

Around 57 percent of students use a credit card; however, this number is a tad misleading since many banks require a cosigner or proof of income. In reality, many young people use their parent’s credit cards, so they're not building their credit score. 

The ultimate credit hack is opening a student credit card account. 

Typically, student cards have looser approval standards and lower available credit limits. The best student credit cards encourage making on-time payments and offer a great method of building credit. 

Opening a student line of credit and bank account is a great financial move and should be made with a company that supports student success! 

Get a cosigner 

Maybe you want access to larger credit limits – can help in an emergency or if you want to make a bigger purchase. That will require getting a credit card of your own, and for that, you’ll likely need a cosigner. 

A cosigner says, in writing, that they vouch for your ability to pay off your first credit card. If you can’t pay your card, then the cosigner is on the hook. 

Before reaching out to potential cosigners, think about whether a cosigned credit card is right for you. Consider the following:

• How much monthly repayment can you handle? 

• What’s the interest rate like on this credit line? Could you get lower interest rates elsewhere? 

• Do you really need the larger credit line, and can you make the minimum payment?

If you see any red flags, maybe look toward other options for building credit. 

Become an authorized user

Another way to access a larger credit limit without a cosigner is to become an authorized user. 

Here’s how it works: anyone with an eligible credit card can add you as an authorized user, and you can make purchases and build credit as if you were the primary cardholder. As a student, this gives you access to a healthy credit card balance and grows your credit score. You get your own credit card and you’re good to go. 

There are only two minor hiccups:

1. Your purchases and the primary’s purchases may all be on one balance sheet 

2. Not all credit cards allow authorized users 

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So, separating payments could be complicated. If your parents are the primaries and they pay all your expenses, it's no big deal, but they will have access to all your payment history. (Those late-night pizza orders and beer runs may get you a call from home.) 

The primary cardholder’s current credit card company also may not allow authorized users. Here's a list of some popular providers that allow authorized users.

Note: bad credit decisions by the primary cardholder will impact your score and vice versa. 

Get credit on your rent payments 

Did you know you can use a debit card to build good credit history from your rent payments? It’s true, and getting credit for these payments can be a stellar way to build credit as a student. 

In order to capitalize on rent payments, you’ll need to:

1. Have the lease be in your name 

2. Make consistent, timely payments 

3. Pay a service like ERentPayment a small monthly or annual fee to report your payments to credit bureaus 

4. Have a landlord who’s registered through the service

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It may seem like a lot of steps, but it’s totally worth it to build a great credit report. If you have a difficult landlord, consider explaining that using this service almost guarantees on-time payments. 

In an ideal world, you pay your rent on time, every time. If this isn’t your reality, we recommend setting up a budget, marking all calendars with the rent due date, and explaining the importance of on-time monthly payments to any roommates. 

Practice good credit habits 

Between class, studying, sports, and social events, you’re a busy student. We get that, and we want to make good credit habits easy to develop. Here are some guidelines for practicing good credit habits and raising your FICO score: 

• No interest left behind. Obviously, you should pay your account on time. Remember also to pay your statement in full. Otherwise, your account will start accumulating interest, which is basically throwing money away. 

• Keep it simple! Don’t open a bunch of credit lines at once. This makes you look riskier and can even lower your credit. Keep it simple with one or two lines of credit. 

• Don’t be a big spender. It may be tempting to go on a shopping spree once you finally get approved for that shiny new credit card. However, maxing out your account can hurt your credit. 

• Avoid credit card breakup. Sure, you can usually close an account any time you want. But, it could affect your credit, and opening and closing accounts quickly can hurt you. Just think before you leave! 

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Avoiding late payments really is the best way to build good credit. It's okay if you need help remembering dates or budgeting appropriately. Building good habits takes time! Take it slow, open only one card, and work with a credit card issuer that wants you to succeed.  

College Students May Build Credit with Kora

Now you should have a good idea of how to build credit as a college student. From opening a student credit card to getting credit for rent payments, there are plenty of options! 

Kora Financial is here to help college students achieve a financial A+. We understand that sometimes students are strapped for cash. With KoraCash, students can get up to $3,000, and any money spent helps build credit (even if you only need $25). 

Download the app for easy access to KoraCash and get started on building your credit today!