Tips to Improve Your Credit Score as a Studentedit
What Are Some of the Best Ways to Increase My Credit Score?
Credit scores aren’t written in stone; they’re a snapshot of your credit file at the time the score is requested. Your credit score can go up or down (or stay the same) as your credit file is updated with new information. So, if you currently have a low score, it doesn’t mean it has to stay low forever. On the flip side, if you have a high score, it doesn’t mean you can stop being responsible with your credit!
Some students have a poor or even non-existent credit score because they simply do not have an established credit history, and this is completely normal especially for high school and college students. Other times, an individual may have misused credit in the past (such as racking up a big credit card bill and never paying) and their credit score suffered as a result.
In either case, college students need to know how to improve their credit score. Below are some of the best ways you can increase your credit score, along with tips to help maintain a good credit score once you have one.
Establish Credit Early
Starting to build your credit history early while in high school and college will help in the long run as length of credit history typically accounts for 15% of your total score.
- Cosign A Loan: Parents can cosign a loan with their child and ensure they make their payments on time.
- Authorized User on A Credit Card: Your parents can add you as an authorized user to a credit card where someone is consistently making payments. Payment history will be added to your credit file. This shows that you can make payments regularly and you can pay them on time. It’s important to know that only some credit scores consider these payments for your credit history.
- Put Bills in Your Name: If you live off-campus in a house or apartment, you may be able to put your cell phone, utility or rent bills in your name. When you make regular monthly payments, this helps to build a positive history on your credit report. It’s important to know that only some credit scores consider these payments for your credit history.
Make Consistent Student Loan Payments
Making payments toward your student loans is one of the first ways you can start to build serious credit. According to the National Council for Credit Counseling, having a history of on-time student loan payments helps build your payment history, which typically accounts for 35% of your score. Making inconsistent or late payments, as well as defaulting, can bring your score down.
Tip: Setting up automatic payments makes paying on time a lot easier, plus many lenders, such as College Ave, offer a 0.25% interest rate reduction for setting up auto-pay.
Shop for a Loan Within a 45-day Window
Whenever you apply for a student loan, there is a hard inquiry on your credit file, also referred to as a hard credit pull. Hard credit pulls can temporarily lower your credit. However, FICO, which is the most common credit score used by credit bureaus, uses a 45-day de-duplication window, beginning at the time of the first inquiry. So, if you want to shop for a student loan from different lenders, doing so within a 45-day window will result in only one inquiry impacting your credit score.
Make More Than Student Loans a Part of Your Credit History
You may notice a dip in your credit once you’ve made your last student loan payment. This is common and occurs when your student loan payments were used as the main driver of your credit score. With little credit history outside of the loan, your credit history shrinks, a factor that typically accounts for 15% of your score.