Start building a strong credit profile in college

For many young adults, college is a period for studying, trying new experiences and working toward a field that will help them enter the job market with ease. It can also be a good time to start cementing their financial and credit profile. Few college students may prioritize their credit scores while they are in school, however, graduating with an established credit history can help young adults get their lives started in the right direction.

For example, many employers will factor in an applicant’s creditworthiness when considering them for a position. Landlords may also hesitate to rent an apartment or home to a tenant that has a limited borrowing history.

Some young adults may have trouble building their credit during their college years simply because it’s more difficult to come by. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 requires to borrowers under 21 have a cosigner or demonstrate that they have adequate income to cover balances. Young adults may consider enlisting their parents as cosigners and obtaining a student card with a low limit to avoid incurring significant credit card debt.

Once students have a card in their name, they can begin a hands-on approach to managing their accounts. It’s not enough to simply open an account in order to build a positive credit history. Instead, borrowers may want to consult with a credit counselor or financial adviser to learn the best practices for responsible money management.

They may learn how to create a budget that allows them to use their credit card effectively without overextending their finances. In addition, consulting with a professional prior to using a credit card can teach young adults helpful tactics to avoid late or missed payments. For example, online bill pay and notification alerts can help individuals learn how to stay on top of their payments.

In addition to gaining a better understanding of credit management, building a credit history may also prompt young adults to check their credit reports. Many individuals fail to monitor their files or lack knowledge about what types of information are included in their reports. Students who access these details early on may be more likely to keep up with this wise practice in the future.

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