Congratulations to Christopher, the winner of the Fall 2019 SDL365 Achievers Scholarship! In his winning essay, Christopher is sharing his tips regarding building credit as a student. These tips have been synthesized from daily life and proper experience, which makes them useful for people who care about their credit score. Christopher, you did a nice job, so we are honored to offer you the main $500 prize in our contest. Congrats to you!
QUICK! What number do people not like talking about? Age? Weight? Math? Well, yes, yes and yes, but there is a specific number tied to each and every one of you that will affect your whole life. A number that students might not want to talk about. I’m talking about your credit score.
As a fellow student, I know it might be a scary topic, but I can’t understate the importance of it. Credit will determine how you will live the rest of your life. Doing little things now will help you, immeasurably. Of course, if I were to make this about general tips on building credit, we’d both be here all night long. Budgeting, keeping old accounts open, don’t apply for new accounts often, etc.
But today I want to give you some lesser-known tips that I wish someone had told me so you can start making smart financial decisions without making the same mistakes I did.
There’s something you need to do before we continue. I want you to throw out any assumptions you have on credit. Straight in the trash. Are they gone? Good.
First, credit is not a bad thing. In fact, credit can be an extremely positive component of your life if you remain responsible. New college students are taught the assumption that credit is bad, and that they shouldn’t touch it with a hundred-foot pole. A lot of college students don’t even realize they have a credit score or even what a credit score is, according to a LendEdu article.
The second assumption to toss away, debt is not a bad thing. In fact, you need some debt in order to build your credit. Just remember to pay your bills on time. If you’re a student, chances are you’re already getting debt, student debt.
Alright, one last assumption to toss out. That gigantic void known as “Student Loans”? There’s no way you should be paying it back now, right? Wrong.
In fact, making loan payments, no matter how small, can make a huge difference. Paying as little as fifteen dollars a month can save you years of paying down the line. Interest doesn’t accrue on subsidized loans meaning whatever you pay goes directly toward the capital. Skipping out on your Friday latte every so often and putting that hard-earned money toward your loans adds up much more than you think. Plus, you build credit because you’re making payments. Win-win!
Alright, one last assumption to throw out, I promise this time. Credit cards are not a bad thing. In fact, in the right hands, credit cards are full of benefits. Students seem to think credit cards are evil, but it’s actually a great way to get a head start on your credit score. Student credit cards come with a bunch of benefits such as Cash Back bonuses, earning you some money every time you use it. Some cards even offer free money if you have a high GPA, according to NerdWallet. Remember, you must not put something on your card you can’t pay off in the short term. If you pay off your bill quick enough (I pay off my bill after every paycheck), you get to pay with no interest and collect all the benefits!
Loud music, 3 am fire alarms, and exorbitant pricing. If you’ve guessed, “What are the three reasons why dorms are terrible?” you win a cookie! If there’s one thing about college I don’t understand, it’s paying for dorms. I know dorms are exciting at first, but trust me, they wear out fast. Why do we pay for them? It’s because it’s part of the college experience, right? It’s cheaper than actual housing… Right? Actually, dorm housing often costs more than off-campus housing.
MyCollegeGuide says student dorm costs anywhere from $8,000 to $13,000 a year. Even on the cheaper side, you’re paying almost $900 a month! For a shared room! You can often find housing for cheaper, especially with other responsible roommates. Not to mention, paying actual rent is another way to increase your credit score! Oh, and you don’t have to worry about Chad bringing his three friends back to your room to party. At 3 am. Again.
It can be hard to think about credit, but the earlier you start the conversation, the less scary it’ll be. It’s only scary if you let it go out of control, but there are so many things you can do now to make sure that never happens. Student credit cards, getting a head start on your loans, and moving to a cozy place off-campus are just some of the ways you can get a jump start on a healthy credit life. But there is one very important thing about this whole credit lesson, more important than any of those topics I’ve mentioned. It’s about being smart about your choices.
The only thing more important than your credit is being educated about it. Start planning now. You can check your credit score once a year without making a hard inquiry on your record. Keep yourself educated. By being smart now, you’ll not only jumpstart your credit score, but it will ensure you get access to all the opportunities you deserve.