College is the perfect time to start managing your own finances. As you do, you’ll begin to realize that credit plays a key role in our financial lives. While the concept can seem a bit intimidating at first, with a few smart decisions, you can set yourself up for long-term credit health. Here are a few things every student should know about credit.
1. YOU CAN START BUILDING A CREDIT HISTORY NOW.
Even though cash can be tight for students, college can be an excellent time to start building your credit history. When you apply for credit in the future, lenders will take things like how much of your credit you’ve utilized and whether you’ve paid your bills on time into account when deciding whether or not to extend credit to you. By opening a credit card or other credit account while you’re a student, you can get a head start on creating a record of responsible credit usage.
2. THAT HISTORY CAN REALLY PAY OFF DOWN THE ROAD.
Your credit history won’t just determine whether or not you’re eligible for a loan in the future. It can also affect the interest rate you receive on that loan or mortgage. On major purchases where you’d utilize credit – think of something like a mortgage or a car loan - being eligible for a lower interest rate can save you thousands of dollars in interest payments over the life of the loan. Even if buying a home seems like a distant goal at the moment, you’ll thank yourself later.
3. USING CREDIT RESPONSIBLY IS A MUST.
As you’re establishing your credit history, make sure it’s one that tells a positive story about your credit usage. Credit cards and other credit products are tools, and it’s important to use them responsibly. When you first start using a credit card, utilize it to make small purchases that you know you will be able to pay back, and pay your balance off every month. By taking these steps, you’ll be able to establish your credit history and start your personal financial journey on the right path.
4. EVERYONE HAS A CREDIT REPORT.
When lenders want to get an idea of your credit history, they don’t just take your word for it. All of your credit activity is recorded in your credit report. This document tracks things like what types of credit you’re using, the date you opened the account, your balances, your payment histories for each account, and more. It’s an important document that lenders, landlords, and other decision makers will use when evaluating you for credit opportunities in the future.
5. IT’S A GOOD IDEA TO KEEP AN EYE ON YOUR CREDIT REPORT.
Given your credit report’s importance, it’s crucial that you monitor it to ensure its accuracy. Typos, clerical errors, and other glitches can lead to mistakes on your credit report. You can get these errors corrected, but it pays to be proactive and get them fixed before a lender is looking at your credit report. There are three reporting agencies that maintain credit reports, and you’re entitled to a free copy of your report once a year from each of them. Even if you’re not planning on applying for credit in the near future, it’s worth checking all three of your reports for inaccuracies every year.
6. CREDIT CARDS CAN BE REWARDING.
Your credit card can help you build your credit history and offer you a convenient way to make purchases, but don’t overlook the other benefits it can carry. Credit card rewards like cashback can really add up when you’re using your card responsibly. When you’re a Discover cardmember, Discover will automatically match all the cash back you’ve earned at the end of your first year as a member, dollar for dollar*.
7. YOU CAN GET A CREDIT CARD THAT IS DESIGNED FOR STUDENTS.
Student life is unique since college is a transitional time between living at home and having a full-time career. Luckily, there are credit cards that are specifically tailored for students and their specific needs. These cards can help you build your credit history while still offering great rewards like cashback. Some will even give you a statement credit for each school year your GPA is 3.0 or higher.
8. YOU CAN USE TECHNOLOGY TO YOUR ADVANTAGE.
Technology plays a huge role in making students’ lives more efficient and convenient, and those benefits can extend to their credit activities. Paying your bills on time is a key step in establishing your credit history, and technology can give you a nice assist on that front. If you’re concerned about having a due date slip your mind during midterms or finals, you can sign up to get automated reminders via email or text. Many cards also give members the option of enrolling in automatic bill payment to ensure they never miss a due date. With a little research, you can find the option that’s right for you.
As you familiarize yourself with the world of credit and build your credit history, it pays to have a card that generates rewards for you. Discover’s Student Card will automatically match all the cash back you’ve earned at the end of your first year as a card member, dollar for dollar.
*Learn more at Discover.