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Barron Advisors Guide for How to Build Credit While Still in School

Building credit is one of the most important concepts for young adults to understand, as having a great credit score is the pathway to gain necessary financing they will require later in life. However, many students are, rightfully so, focused on their academics and making sure that they make it out of school with a degree. However, there are many who do not realize that they can already start to build credit while they are in classes. Here are ways for students to build credit while they are still in school. 

Get Added as an Authorized Credit User

Being an authorized user for a credit card contains many benefits, with the greatest being the ability to build credit. Basically, as an authorized credit user, you will be able to use someone else’s credit card in your name. This will enable you to make purchases on the card as if it were your own card. If both you and the primary cardholder use the credit card responsibly, this can help you build credit.

Generally, it is recommended to become an authorized credit user of someone you trust, and for students, this is most commonly their parents. However, you should also be forewarned. If the primary cardholder starts to become irresponsible in using the card, this can negatively impact your own credit. This is especially the case if there is a large balance and only minimal monthly payments being made. Be sure that both of you are responsible with the funds available.

Obtain Your Own Credit Card

Of course, you can always opt to call the shots yourself and own your own credit card. Once you are able to open a credit card in your name, you will be able to start building a credit history. A credit card should not be viewed as a necessity, but if you are able to use a very small amount of it and pay off the balance in full each month, it will accelerate your credit score quickly. It will also help you to practice healthy financial habits as you continue to grow.

For most students in school, an appealing option could be secured credit cards that require a security deposit that will transform into your line of credit. These are the kinds of credit cards recommended for students because they can help you learn how to manage your credit like a responsible adult would. The most important thing to make sure of is that the issuer of the card reports the activity to all the major credit bureaus so that your responsible actions can be recorded for the record.

As students get older, they may be privy to more financial options available at their disposal. This can come in the form of debt consolidation loans. Companies such as Barron Advisors can help you in this endeavor. This will help you build credit by easing the interest burden on credit cards you may have needed to use in the past.

Practice Strong Financial Habits

Perhaps more important than getting the actual cards themselves is to practice good financial habits. Obtaining a credit card can work against you if you are irresponsible with your spending and how you utilize credit. As a student, there may be other primary financial obligations that you have such as feeding yourself, transportation, clothing, supplies and books for school.

The general rule of thumb is to never spend more than a third of what your credit card allows. So, for example, if you have a credit card with a $200 limit, you do not want to go over $65. This is because if you use larger amounts of credit, not only does it create a mindset of irresponsible spending, but it will also leave you with a larger monthly balance that may force you to start only making the minimum monthly payments. This is often where most credit users, especially younger credit card holders, fall into trouble. It is important to understand the concept of credit utilization so that you are not borrowing more relative to how much credit you have.

Experts in the industry such as Barron Advisors can guide you towards efficient options to building credit, and debt consolidation loans may be one option to consider. 

As you can see, you are able to build credit while studying in school. Prepare for your financial future by taking some of these tips to heart.