Credit is awfully complicated. It seems like anything and everything could affect your credit, from using too much of your available balance to not having enough credit sources. And, unfortunately, you need credit for a lot of different “adult” things like buying a car or getting loans for grad school. Here’s a few ways you can work on building your credit as a college student:
No one wants to see this when they apply for a credit card!
1. Have several different sources of credit: While it’s possible to have a high credit score with only one open credit account, it’s better for your “credit mix” to have a few different sources. Additionally, if you have two credit cards with a combined limit of $2500, for example, you’ll use less of your overall credit limit, which is good for your score. And be careful about what sources actually affect your credit: for example, your electric bill, which is commonly thought to appear on your credit, actually doesn’t.
2. Don’t apply for a lot of credit cards at once: A “hard pull” on your credit, like when you apply for a credit card, can actually lower your credit score. Just checking your credit score, however, doesn’t affect your credit at all and can help you determine which cards/loans you’ll be approved for.
3. Don’t close accounts: This can negatively affect how banks see your credit history and your credit limit.
4. Always, always, always (always!) pay off your balance: No matter what, not paying off your balance is the easiest way to bring down your credit score. And then you’ll be in debt, and no one wants that!
Do you have any advice on how to keep your credit high? Let me know in the comments below!
Photos from Creative Commons