The choices you make in college regarding your credit and finances can impact your life for years to come. This includes receiving loans, getting an apartment, or being offered a job.
There are five main factors that impact your credit score:
Payment History (35%) This is your ability to make on time payments on your account.
Credit Utilization (30%) This is how much of a balance you have in comparison to your available credit.
Credit History (15%) This is the amount of time that you have had credit or loans.
Credit Mix (10%) This is the types of debt you have: such as loans, credit cards, etc.
New Credit (10%) When you open new lines of credit, an inquiry takes place on your credit. Trying to open too many lines of credit at once can lower your score.
CHOOSE THE RIGHT CARD
With so many card options out there, you want to make sure that you pick one that’s right for you. Remember to take factors such as the interest rate and yearly fees into consideration so you don’t run into a surprise down the line.
APPLY SPARINGLY
Every time you apply for some line of credit, an inquiry takes place on your credit. This may result in your overall credit score dropping a couple of points. Furthermore, if you apply for a lot of credit at one time, it may show lenders that you are dependent upon credit, making it difficult to receive other loans in the future. Start with one card and then wait a couple of years before applying for another.
DON’T CO-SIGN FOR FRIENDS
Even if you have been friends since you were kids, you should never co-sign on a friend’s credit card. If they fall behind in payments, your credit score may be negatively impacted and you may become responsible for any delinquent payments.
USE IT (RESPONSIBLY)
Once you have a credit card, you need to use it. Even small, occasional purchases will help to start building your credit. Many people use their credit card to make purchases they were going to make anyway (grocery shopping, gas, bills, etc.) and then immediately pay off the card. Just make sure you have a plan to pay off any purchases so you don't end up paying extra in interest.
